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As filed with the Securities and Exchange Commission on April 9, 2004

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.*
(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation of Organization)

6719
(Primary Standard Industrial
Classification Code Number)

52-2126573
(I.R.S. Employer
Identification Number)

600 TELEPHONE AVENUE, ANCHORAGE, ALASKA 99503, (907) 297-3000
(Address, including zip code, and telephone number including
area code, of registrant's principal executive offices)

LEONARD A. STEINBERG, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
600 TELEPHONE AVENUE
ANCHORAGE, ALASKA 99503
(907) 297-3000
(Name, Address, Including Zip Code, and Telephone Number Including Area Code, of Agent For Service)

*Copies to:*
Daniel E. Wolf, Esq. Mark C. Smith, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 (212) 735-3000		Oren B. Azar, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 (212) 848-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous bases pursuant to Rule 415 under the Securities Act, check the following box: o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Proposed maximum aggregate offering price(1)	Amount of registration fee


Income Deposit Securities (IDSs)(2)

Shares of Class A Common Stock, par value $0.01 per share(3)

% Senior Subordinated Notes due 2014(4)

Subsidiary Guarantees of % Senior Subordinated Notes due 2014(5)

Total	$400,000,000	$50,680

(1): Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2): The IDSs represent shares of the Class A common stock of Alaska Communications Systems Group, Inc. ("ACSG") and $ million aggregate principal amount of % senior subordinated notes due 2014 of ACSG (the "Notes"), including IDSs subject to the underwriters' overallotment option and an indeterminate number of IDSs of the same series which may be received by holders of IDSs in the future on one or more occasions in replacement of the IDSs being offered hereby in the event of a subsequent issuance of IDSs, upon an automatic exchange of portions of the Notes for identical portions of such additional notes as discussed in note (4) below.
(3): Includes shares of ACSG's Class A common stock subject to the underwriters' overallotment option.
(4): Includes (a) $ million aggregate principal amount of Notes included in the IDSs, (b) $ million aggregate principal amount of Notes sold separately (not in the form of IDSs), (c) $ million aggregate principal amount of Notes subject to the underwriters' overallotment option granted in connection with the issuance of the IDSs and (d) an indeterminate principal amount of notes of the same series as the Notes, which will be received by holders of Notes in the future on one or more occasions in the event of a subsequent issuance of Notes forming part of an additional issuance of IDSs upon an automatic exchange of portions of the Notes for identical portions of such additional notes.
(5): Each of the subsidiaries of ACSG listed in the "Table of Additional Registrants" below will issue a guarantee with respect to the Notes. Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee for the guarantees is payable.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

*TABLE OF ADDITIONAL REGISTRANTS

Name	State or Other Jurisdiction of Incorporation or Organization	Primary Standard Industrial Classification Code Number	I.R.S. Employer Identification Number
Alaska Communications Systems Holdings, Inc.	Delaware	6719	91-1921377
ACS of the Northland, Inc.	Alaska	4813	91-1336980
ACS of Alaska, Inc.	Alaska	4813	91-1112844
ACS of Fairbanks, Inc.	Alaska	4813	91-1557266
ACS of Anchorage, Inc.	Delaware	4813	52-2124846
ACS Wireless, Inc.	Alaska	4812	92-0156992
ACS Internet, Inc.	Delaware	4899	92-0153253
ACS Messaging, Inc.	Alaska	4813	92-0173636
ACS Infosource, Inc.	Alaska	2741	92-1073635
ACS of Alaska License Sub, Inc.	Alaska	4812	92-0173072
ACS of the Northland License Sub, Inc.	Alaska	4812	92-0173071
ACS of Fairbanks License Sub, Inc.	Alaska	4812	92-0173074
ACS of Anchorage License Sub, Inc.	Alaska	4812	92-0173073
ACS Wireless License Sub, Inc.	Alaska	4812	92-0173075
ACS Long Distance License Sub, Inc.	Alaska	4812	92-0173076
ACS Television License Sub, Inc.	Alaska	4812	92-0173077
ACS Services, Inc.	Alaska	9999	92-0176176
ACS Long Distance, Inc.	Alaska	4813	92-0158899

*: The address, including zip code and telephone number, including area code, of the principal executive offices of these additional registrants is 600 Telephone Avenue, Anchorage, Alaska 99503, (907) 297-3000.

SUBJECT TO COMPLETION, DATED APRIL , 2004.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PROSPECTUS

Income Deposit Securities (IDSs)
and
$ % Senior Subordinated Notes due 2014
Alaska Communications Systems Group, Inc.

We are offering IDSs. The IDSs being offered by this prospectus represent shares of our Class A common stock and $ million aggregate principal amount of our % senior subordinated notes due 2014. Each IDS initially represents:

•: one share of our Class A common stock; and
•: $ principal amount of our % senior subordinated notes due 2014.

We are also separately offering $ million aggregate principal amount of our % senior subordinated notes due 2014, not as part of the IDSs. We refer to these notes as the separate notes. The senior subordinated notes included in the IDSs and the separate notes are identical in all respects and be issued under the same indenture as part of a single series. We refer to the notes forming part of the IDS and the separate notes, collectively, as the notes.

We have granted the underwriters an option to purchase up to additional IDSs to cover overallotments.

This is the initial public offering of our IDSs and a public offering of the separate notes. We currently expect the initial public offering price of the IDSs to be between $ and $ per IDS and the public offering price of the separate notes will be % of the stated principal amount of $ per separate note. We will apply to have the IDSs listed on the under the symbol " ." The Class A common stock will not be listed for separate trading until the minimum listing criteria on the are satisfied by our outstanding shares of Class A common stock not held in the form of IDSs, as further described in "Description of Capital Stock—Class A Common Stock—Listing," for a period of 30 consecutive trading days. We do not anticipate that the notes will be separately listed on any exchange.

The notes mature on , 2014. We may extend the maturity of the notes for two additional successive five-year terms if certain conditions described in this prospectus are satisfied. The notes will bear interest at the rate of % per year. Interest on the notes is payable on , , and of each year, beginning on , 2004. We may redeem some or all of the notes at any time on or after , 2009. We may also redeem up to 35% of the notes using the proceeds of certain equity offerings completed before , 2007. Redemption prices are described under the caption "Description of Notes — Optional Redemption."

The notes will be our unsecured senior subordinated obligations, guaranteed on an unsecured senior subordinated basis by each of our direct and indirect domestic subsidiaries (other than unrestricted subsidiaries). The notes and the guarantees will rank equally with our and our subsidiary guarantors' current and future senior subordinated debt and junior to all of our and our subsidiary guarantors' existing and future senior debt.

Holders of IDSs will have the right to separate the IDSs into shares of our Class A common stock and notes represented thereby at any time after the earliest of (1) 90 days from the closing of this offering, (2) the occurrence of a change of control repurchase offer or (3) the occurrence of an asset sale repurchase offer. The IDSs will automatically separate into shares of our Class A common stock and notes upon the redemption of all the notes, upon maturity of the notes or upon certain bankruptcy events. Prior to any such automatic separation, any holder of shares of Class A common stock and notes may, at any time, combine the applicable number of shares of Class A common stock and principal amount of notes to form IDSs.

Upon a subsequent issuance of notes of the same series, whether sold separately or in the form of IDSs, a portion of your notes may be automatically exchanged for an identical principal amount of the notes issued in such subsequent issuance and, in that event, your notes or IDSs will be replaced with new notes or IDSs, as applicable. For more information regarding these automatic exchanges and the effect they may have on your investment, see "Description of Notes — Covenants Relating to IDSs — Procedures Relating to Subsequent Issuance" and "Material U.S. Federal Income Tax Considerations — Consequences to U.S. Holders — Notes — Additional Issuances."

Investing in the IDSs, our common stock and notes, including the separate notes, involves risks. See "Risk Factors" beginning on page 24.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per IDS(1)	Total		Total
Public Offering Price	$	$	%	$
Underwriting Discount	$	$	%	$
Proceeds to Alaska Communications Systems Group, Inc. (before expenses)	$	$	%	$

(1): Comprised of $ allocated to each share of Class A common stock and $ allocated to each note, representing 100% of its stated principal amount.

The underwriters expect to deliver the securities to purchasers on or about , 2004.

Joint Book-Running Managers

Citigroup

CIBC World Markets

JPMorgan

Joint Lead Managers

Banc of America Securities LLC

RBC Capital Markets

, 2004

NOTICE TO PURCHASERS OF SEPARATE SENIOR SUBORDINATED NOTES AND ACKNOWLEDGEMENT OF PURCHASER INTENT

None of the separate notes purchased in connection with this offering may be purchased, directly or indirectly, by persons who are also (1) purchasing IDSs in this offering or (2) otherwise receiving IDSs or shares of Class B common stock in connection with the Transactions. Accordingly, each investor purchasing separate notes in this offering must not purchase IDSs in this offering and must not concurrently enter into any plan or pre-arrangement whereby it would (1) acquire any IDSs or our company equity (as defined below) or (2) transfer the separate notes to any holder of IDSs or our company equity. In addition, each person receiving IDSs or shares of Class B common stock in connection with the Transactions must not purchase separate notes in this offering.

Each investor in this offering assumes sole responsibility for ensuring that it complies with the restrictions above. Neither we nor the underwriters will assume any responsibility to ensure that any investor complies with these restrictions. If you are unsure whether the restrictions above would prohibit you from purchasing the separate notes or our IDSs in this offering, you should consult your own legal advisor regarding to the application of these restrictions to your individual circumstances.

Furthermore, each person purchasing separate notes in this offering, by acquiring the separate notes, thereby represents to us and the underwriters that:

(a): neither such purchaser nor any entity, investment fund or account over which such purchaser exercises investment control is purchasing IDSs in this offering;
(b): neither such purchaser nor any entity, investment fund or account over which such purchaser exercises investment control owns, or has the contractual right to acquire, our equity securities, including securities which are convertible, exchangeable or exercisable into or for our equity or our equity-linked securities (which we refer to collectively as our company equity); and
(c): such purchaser is not party to any plan or pre-arrangement whereby it would (1) acquire any IDSs or our company equity or (2) transfer the separate notes to any holder of IDSs or our company equity.

For purposes of these representations, the "purchaser" shall be deemed to be (1) the person who initially purchases the separate notes from the underwriters in this offering and (2) the person(s), if any, pursuant to whose instructions such purchase of separate notes is being made.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.

TABLE OF CONTENTS

		Page
Summary		1
Risk Factors		24
Cautionary Notice Regarding Forward-Looking Statements		49
Use of Proceeds		51
Price Range of Common Stock		52
Capitalization		53
Dilution		54
The Reclassification		55
Dividend Policy and Restrictions		56
Selected Historical Financial Data		58
Unaudited Pro Forma Condensed Consolidated Financial Information		59
Management's Discussion and Analysis of Financial Condition and Results of Operations		67
Business		89
Regulation		103
Management		113
Certain Relationships and Related Party Transactions		126
Principal Stockholders		128
Description of Other Indebtedness		131
Description of the IDSs		136
Description of Capital Stock		141
Description of Notes		148
IDSs Eligible For Future Sale		194
Material U.S. Federal Income Tax Considerations		195
Underwriting		204
Legal Matters		207
Experts		207
Where You Can Find More Information		207
Glossary		208
Index to Consolidated Financial Statements and Schedule		F-1

Until , 2004 (25 days after the date of this prospectus), all dealers that buy, sell or trade our IDSs, the underlying securities represented thereby or the % senior subordinated notes due 2014 offered separately, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

INDUSTRY AND OTHER INFORMATION

Unless otherwise indicated, information contained in this prospectus concerning the telecommunications industry, our general expectations concerning this industry and our and our competitors' market position and market shares within this industry are based on assumptions and estimates prepared by us using data from industry sources, and on assumptions made by us based on our management's knowledge and experience in the markets in which we operate and the telecommunications industry generally. We believe these estimates are accurate as of the date of this prospectus, however this information may prove to be inaccurate because, as a result of the method by which we obtained some of the data for our estimates or the nature of the information, it cannot always be verified with certainty. We have not independently verified data from industry or other third-party sources and cannot guarantee its accuracy or completeness. In addition, we believe that data regarding the telecommunications industry and our market positions and market shares within the telecommunications industry provide general guidance but are inherently imprecise. Further, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under "Risk Factors" and "Cautionary Notice Regarding Forward-Looking Statements" in this prospectus.

SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary is not complete and is qualified in its entirety by, and should be read in conjunction with, the more detailed information about us, the IDSs, and our common stock and notes, including the section entitled "Risk Factors" and our financial information, appearing elsewhere in this prospectus. Throughout this prospectus, we refer to Alaska Communications Systems Group, Inc., the issuer of the IDSs, and its consolidated subsidiaries, as "ACS Group," the "company," "we," "our" and "us," unless otherwise indicated. Any reference to "ACSH" refers to our wholly owned subsidiary, Alaska Communications Systems Holdings, Inc., and its consolidated subsidiaries, unless otherwise indicated. Pro forma financial information presented in this prospectus gives effect to the transactions described in "— The Transactions" and the sale in 2003 of our published yellow page directory advertising business in Alaska, which we refer to as our Directories Business, see "Unaudited Pro Forma Condensed Consolidated Financial Information." See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Alaska Communications Systems Group" for more information on our Directories Business. Unless the context otherwise requires, references in this Prospectus to the "offering" refer to both the offering of IDSs and the offering of $ million aggregate principal amount of our separate % senior subordinated notes due 2014, which we refer to as the separate notes. Any references to the "notes" refer to the % senior subordinated notes due 2014 included in the IDSs and the separate notes.

Our Company

We are the leading facilities-based telecommunications services provider and largest local exchange carrier (LEC) in Alaska and the 13th largest LEC in the United States. We offer consumer and business customers throughout the state a diverse mix of telecommunications services, including local telephone, wireless, Internet, and long distance services using our own network, as well as video entertainment through our partnership arrangement with DISH Network, a leading satellite service provider. We offer our telecommunications services under a single brand name, Alaska Communications Systems. As of December 31, 2003, we had 314,221 local telephone access lines, 87,017 wireless subscribers, 46,057 Internet subscribers (including 17,780 high-speed digital subscriber line, or DSL, subscribers) and 43,166 long distance customers.

We began operations in May 1999 when we completed the acquisition and integration of four local telephone companies in Alaska. Each of the businesses we purchased had been operating in its local markets for over 50 years. Since 1999, we have invested in upgrading our network and service capabilities and improved our cost management in our local telephone operations. As a result, our core local telephone business has generated stable revenues and cash flows since 2000.

Our Service Offerings

Local Telephone (69.1% of Pro Forma Operating Revenues for 2003). We provide local telephone service to approximately 314,000 access lines, representing over two-thirds of the local access lines in Alaska. We generate local telephone revenue from providing local telephone service to consumer and business customers and by providing access to our network and back office functions to other telecommunications providers. At December 31, 2003, approximately 52% of our retail access lines served consumers and 48% served business customers.

Wireless (14.9% of Pro Forma Operating Revenues for 2003). We provide statewide mobile and fixed voice and data communications services to approximately 87,000 wireless subscribers throughout Alaska. Our wireless network has a covered population of approximately 480,000, representing over 70% of the state's population according to the most recent U.S. Census Bureau estimates. Our wireless customers represent approximately 18.1% penetration of our covered population. Currently, we provide our

wireless services using a digital TDMA network and later this year we will deploy a next generation CDMA 1xRTT network capable of offering advanced mobile and fixed data services to our customers.

Internet (10.6% of Pro Forma Operating Revenues for 2003). We provide Internet access services to approximately 46,000 subscribers, including high-speed DSL service to approximately 18,000 subscribers. We are currently able to offer DSL service to approximately 72% of our local access lines in our four major LEC service territories — Anchorage, Fairbanks, Juneau and the Kenai Peninsula. We are also a single-source provider of advanced IP-based private networks to large enterprise and governmental customers in Alaska.

Long Distance (5.4% of Pro Forma Operating Revenues for 2003). We offer long distance and interexchange private-line services primarily as a facilities-based carrier to approximately 43,000 long distance customers in our state.

Video Entertainment. In the third quarter of 2003 we began offering customers in Alaska satellite video entertainment through a partnership arrangement with DISH Network.

Competitive Strengths

We enjoy strong operating margins and attractive growth prospects due to the following competitive strengths:

Leading Competitive Position. We are the leading facilities-based telecommunications services provider in Alaska. We believe our strong brand name recognition within Alaska provides us with a solid local market position.

•: We are the incumbent local telephone company in Anchorage, Fairbanks, Juneau, the Kenai Peninsula and more than 70 other communities.
•: We are the second-largest wireless communications services provider in Alaska and our statewide wireless network covers over 70% of the population.
•: We are the second-largest provider of Internet access services and the largest provider of DSL services in Alaska.

Integrated Portfolio of Service Offerings. We offer a variety of bundled service packages to our consumer and business customers, which include local telephone services, wireless, Internet, long distance, messaging, video entertainment and other services. We believe that bundled offerings are popular with customers because they allow for a single customer service interface and fewer billing statements, while providing greater value and pricing benefits across a number of services. By actively marketing and selling our bundled service packages, we believe we can grow our customer base, improve customer loyalty and increase our share of our customers' telecommunications purchases.

Advanced Networks and Facilities. Since 1999, we have invested over $356 million in our telecommunications networks and facilities, increasing the total investment in these facilities to approximately $1.0 billion. As a result of these investments, we believe we have substantially built out our networks and facilities, allowing us to offer a full range of reliable telecommunications services. For example, we are able to offer DSL service to approximately 72% of our local access lines in our four major LEC service territories. Over the next few years we expect to augment our existing networks and facilities, including the completion of the build out of our statewide CDMA 1xRTT wireless network, which will allow us to expand our covered population and offer a range of wireless voice and broadband services to our customers.

Favorable Alaskan Market Conditions. We believe we have an attractive and growing potential customer base. For the three-year period 2000 to 2002, the median household income in Alaska was 28% higher than the average in the rest of the United States, and Alaskans spent 33% more on communications services than other Americans. According to the U.S. Census Bureau, over the past 20 years, the Alaskan population has increased by more than 2% per year — nearly triple the national average. From 2000 to 2002, federal government expenditures in Alaska increased by a total of 38% while the national average increased by only 21%. We believe these factors will continue to contribute to our stability and growth, and provide us with an advantage relative to comparable communications companies located in other states. We believe that the Alaskan communications market's combination of large geographic size and isolated markets featuring both major metropolitan areas and small, dense population clusters reduces the likelihood of entry by new integrated facilities-based service providers.

Strong Management Team. Our management team has a proven track record of operating and managing telecommunications companies. During the last nine months, we have added a number of key individuals to our executive management team who have a wealth of knowledge in the telecommunications industry and understand the dynamics of the Alaskan markets and our customers. Liane Pelletier joined us in October 2003 as CEO and President and also became Chairperson of our Board of Directors on January 1, 2004. Before joining us, Ms. Pelletier worked for 17 years at Sprint Corporation, most recently as a member of the Executive Management Committee and as Chief Integration Officer. David Wilson, who was previously CFO of Triumph Communications and DIRECTV Broadband, has joined us as our Chief Financial Officer. In addition to Ms. Pelletier and Mr. Wilson, David C. Eisenberg and Sheldon Fisher recently joined us from Sprint as Senior Vice President, Corporate Strategy and Development and Senior Vice President, Sales and Product Marketing, respectively. Andrew Coon has also joined us as Director of Business Sales and Services from General Communications Inc., our principal competitor, where he was Director, Major Strategic Accounts and former Vice President of Sales. Under the leadership of our senior management team, we have refocused our company to better serve the needs of consumer and business customers in Alaska.

Business Strategy

Our goal is to be the premier telecommunications services provider in our markets and to maintain and grow our cash flow by capitalizing on:

•: our ability to provide a broad array of communications services;
•: our extensive facilities-based network; and
•: our long history of meeting the communications needs of the customers of our unique state.

We consider the following strategies to be integral to achieving our goal:

•: maintaining and increasing the number of loyal consumer, business and wholesale customers that we serve and having our customers buy more of our services and regularly refer new customers to us;
•: offering our customers an integrated bundle of telecommunications services including local telephone, wireless, Internet, long distance, messaging and video entertainment;
•: capitalizing on our significant existing investment in our technologically advanced networks to provide feature-rich, high-quality and highly reliable telecommunications services such as DSL and broadband wireless service to our customers;

•: increasing our margins through ongoing process improvements, strategic sourcing initiatives, reduced costs and improved operating efficiencies; and
•: exploring profitable strategic acquisitions of other telecommunications businesses.

The Transactions

We are offering the IDSs and the separate notes described in this prospectus as part of our overall plan to recapitalize and to refinance a portion of our existing debt, which we believe will improve our financial flexibility. This recapitalization and refinancing will consist of the following transactions:

•: This Offering. In this offering, we expect to receive approximately $ of net proceeds after estimated underwriting discounts and other fees, assuming an initial public offering price of $ per IDS, which is the midpoint of the range set forth on the cover page of this prospectus for the IDSs, and an issuance of $ aggregate principal amount of separate notes. See "Use of Proceeds."
•: Reclassification of Our Common Stock. Concurrently with the closing of this offering, we will, in accordance with Delaware law, reclassify each outstanding share of our existing common stock into the right to receive $ in cash and shares of our Class B common stock. We refer to this as the reclassification. A portion of the shares of Class B common stock issued to our existing stockholders in the reclassification is subject to pro rata redemption with the net proceeds received by us from any sale of IDSs in connection with the exercise of the underwriters' overallotment option. On the 12^th day after the completion of the reclassification, any shares of Class B common stock that remain outstanding in excess of 10% of the overall value of our equity capitalization will be exchanged for IDSs. We expect that shares of Class B common stock issued in the reclassification will be exchanged for IDSs on the 12^th day after the completion of the reclassification (if the underwriters exercise their overallotment option in full, shares of Class B common stock issued in the reclassification will be redeemed on the 12^th day after the closing of this offering). Our existing common stock will also be delisted from the Nasdaq National Market. Under the terms of our Amended and Restated Certificate of Incorporation, the reclassification will require the approval of stockholders owning a majority of the outstanding shares of our existing common stock. Affiliates of Fox Paine & Company, LLC, whom we refer to as Fox Paine, who currently hold approximately 66.0% of the voting power of our existing common stock, have informed us that they intend to approve the reclassification by written consent. This approval is sufficient stockholder approval to complete the reclassification. See "The Reclassification" for more information and "Description of Capital Stock—Class B Common Stock" for a description of the terms of the Class B common stock.
•: New Revolving Credit Facility. Concurrently with the closing of this offering, ACSH will enter into a new $50.0 million revolving credit facility. The new revolving credit facility will contain restrictions on ACSH's ability to make distributions to us that we will need in order to make interest and dividend distributions on the IDSs and the separate notes. See "Description of Other Indebtedness — New Revolving Credit Facility" for a summary of the material terms of the new revolving credit facility.
•: Repayment of the Existing Credit Facility. Concurrently with the closing of this offering, we will repay all outstanding borrowings under, and terminate, our existing credit facility. The existing credit facility consists of a term loan and a revolving credit facility. As of December 31, 2003, the principal amount outstanding under the existing credit facility was $200.0 million, consisting entirely of term loan borrowings.

•: Redemption or Repurchase of Senior Discount Debentures. Following the closing of this offering, we will redeem or repurchase the outstanding $17.3 million aggregate principal amount of our 13% Senior Discount Debentures due 2011, which we refer to as the senior discount debentures. The terms of the senior discount debentures permit us to redeem all such debentures at 106.5% of the principal amount, plus accrued and unpaid interest.
•: Interest Rate Swap Arrangements. Concurrently with the closing of this offering, we will enter into interest rate swap arrangements which we refer to as the interest rate swap arrangements. The interest rate swap arrangements will generate fixed payments totaling $ million annually until December 31, 2008, which we intend to use to satisfy a portion of the interest payment obligations on the 9⁷/8% senior notes due 2011 issued by ACSH and the 9³/8% senior subordinated notes due 2009 issued by ACSH, which we refer to as the ACSH notes. The fixed payments under the interest rate swap arrangements will be received by us on identical dates to the interest payment dates on the ACSH notes. We believe the interest rate swap arrangements, together with the interest payments on the notes, create the economic equivalent of paying a fixed market rate of interest that we would have obtained had we refinanced the ACSH notes with a new senior secured credit facility with a five-year term, although the interest rate swap arrangements will be accounted for as notes receivable under generally accepted accounting principles in the United States. We will be required to pay $ million upon closing of the Transactions in consideration for entering into the interest rate swap arrangements. This amount represents the present value of the payments under those interest rate swap arrangements. We believe that this amount is reasonably consistent with the amount of cost we would have incurred to refinance and tender for or call, as the case may be, the ACSH notes.

The closing of this offering, the reclassification, the entering into of the new revolving credit facility and entering into the interest rate swap arrangements are each conditioned on the completion of the other. The completion of the reclassification and the closing of this offering will occur on the same day.

We refer to this offering, the reclassification, including the subsequent redemption and exchange of Class B common stock in the 12 days after the reclassification, entering into of the new revolving credit facility, the repayment of the existing credit facility, the redemption or repurchase of the senior discount debentures and the entering into of the interest rate swap arrangements collectively as the Transactions.

Our principal executive offices are located at 600 Telephone Avenue, Anchorage, Alaska 99503, and our telephone number is (907) 297-3000. Our website address is www.alsk.com. Information included, referred to on or connected to our website is not part of this prospectus.

Corporate Structure

The following chart reflects a summary of our capital structure after giving effect to the Transactions:

(1): Concurrently with the closing of this offering, our existing common stock will be reclassified into cash and shares of our newly issued Class B common stock. Following the automatic exchange of a portion of our Class B common stock that we issued in the reclassification on the 12^th day following the completion of the reclassification, the new IDS investors are expected to hold IDSs (which represents 100% of our Class A common stock and $ million aggregate principal amount of notes). If the underwriters exercise their overallotment option in full, following the redemption of our Class B common stock with the net proceeds of the IDSs sold in connection with such exercise and the subsequent exchange of the remaining Class B common stock issued in the reclassification following such redemption in excess of 10% of our overall equity capitalization for IDSs on the 12^th day following the closing of this offering, the new IDS investors will hold IDSs (which represents 100% of our Class A common stock and $ million aggregate principal amount of notes). The holders of the separate notes are expected to hold $ million aggregate principal amount of our separate notes, representing % of all the notes issued or % of all the notes issued if the underwriters exercise their overallotment option in full. See "—The Transactions—Reclassification of Our Common Stock" for a description of the reclassification.
(2): We will guarantee ACSH's new revolving credit facility and pledge all the outstanding shares of ACSH common stock and substantially all of our other assets to the lenders under the new revolving credit facility. See "Description of Other Indebtedness—New Revolving Credit Facility."
(3): The notes, both those represented by the IDSs and the separate notes, will be fully and unconditionally guaranteed, on an unsecured senior subordinated basis, by each of our direct and indirect domestic subsidiaries (other than unrestricted subsidiaries). ACS Media Holdings LLC initially will be our only unrestricted subsidiary. See "Description of Notes — Guarantees." Each of the direct and indirect subsidiaries of ACSH (other than ACS Media Holdings LLC) are guarantors of the ACSH notes. In addition, each of the direct and indirect domestic subsidiaries of ACSH (other than ACS Media Holdings LLC) will guarantee our new revolving credit facility and will pledge substantially all of its assets (including the capital stock of domestic subsidiaries) to the lenders under the new revolving credit facility. See "Description of Other Indebtedness — New Revolving Credit Facility." ACS Media Holdings LLC holds our remaining 0.1% interest in our former Directories Business and does not conduct any operations.

For more information on our capital structure, see "Capitalization."

The Offering

Summary of the IDSs and the Notes

We are offering IDSs, or Income Deposit Securities, at an initial public offering price of $ per IDS. We are also separately offering $ million aggregate principal amount of separate notes at a public offering price of % of their stated principal amount of $ per separate note. In addition, see "—Summary of the Notes."

What are IDSs?

IDSs are units comprised of our Class A common stock and our % senior subordinated notes due 2014. Each IDS initially represents:

•: one share of our Class A common stock; and
•: $ principal amount of notes.

What payments can I expect to receive as a holder of IDSs?

Assuming we make our scheduled interest payments and pay dividends in the amount contemplated by the dividend policy to be adopted by our board of directors upon closing of this offering, you will receive in aggregate approximately $ per year in dividends and interest on the Class A common stock and notes represented by each IDS.

You will be entitled to receive quarterly interest payments at an annual rate of % of the aggregate principal amount of notes represented by your IDSs or approximately $ per IDS per year.

You will also be entitled to receive quarterly dividend payments on the shares of Class A common stock represented by your IDSs, if and to the extent dividends are declared by our board of directors and permitted by applicable law and our amended and restated certificate of incorporation, the terms of the indenture governing the notes, the new revolving credit facility and the terms of our then existing other indebtedness, including the ACSH notes. The indentures governing the ACSH notes, the new revolving credit facility and the indenture governing the notes each contain restrictions on our ability to declare and pay dividends on our Class A common stock. See "Dividend Policy and Restrictions," "Description of Notes — Certain Covenants — Restricted Payments" and "Description of Other Indebtedness." We will adopt a dividend policy which, subject to applicable law and the terms of our then existing indebtedness, contemplates that initial annual dividends will be approximately $ per share of our Class A common stock. However, our board of directors may, in its sole discretion, modify or repeal this dividend policy. We cannot assure you that we will pay dividends at this level in the future or at all. See "Risk Factors — Risks Relating to the IDSs, including the Class A Common Stock and Notes Represented by the IDSs, and the Separate Notes — You may not receive the level of dividends provided for in the dividend policy our board of directors is expected to adopt upon the closing of this offering or any dividends at all."

We expect to make interest and dividend payments, if any, on , , and of each year to holders of record on the preceding , , and , respectively.

The cash used to make interest and dividend payments is expected to come from distributions from ACSH. The new revolving credit facility and the indentures governing the ACSH notes contain provisions limiting ACSH's ability to make distributions to us under certain circumstances. See "Description of Other Indebtedness — New Revolving Credit Facility — Limitations on Distributions," "— The 9³/8% Senior Subordinated Notes Due 2009" and "— The 9⁷/8% Senior Notes Due 2011."

Will my rights as a holder of an IDS be any different than the rights of a beneficial owner of separately held Class A common stock and notes?

No. As a holder of IDSs, you are the beneficial owner of the Class A common stock and the notes represented by your IDSs and as a holder of a separate note, you are also a beneficial owner of a note with all the same rights as a holder of a note included in an IDS. As such, through your broker or other financial institution and The Depository Trust Company, or DTC, you will have exactly the same rights, privileges, and preferences, including rights to receive distributions and interest, rights and preferences in the event of a default under the indenture governing the notes, ranking upon bankruptcy and rights to receive communications and notices as a beneficial owner of separately held Class A common stock and notes, as applicable, would have through its broker or other financial institution and DTC.

Do I have voting rights as a holder of IDSs?

Yes. As a holder of IDSs, you will be able to vote with respect to the underlying shares of Class A common stock included in the IDSs.

What will happen to the IDSs I hold upon a stock split, recombination or reclassification of the Class A common stock?

The ratio of shares of Class A common stock to principal amount of notes represented by an IDS is subject to change in the event of a stock split, recombination or reclassification of our Class A common stock. For example, if we elect to effect a two-for-one stock split of our Class A common stock, from and after the effective date of the stock split, each IDS will represent two shares of Class A common stock and the same principal amount of notes as it previously represented. Likewise, if we effect a recombination or reclassification of our Class A common stock, each IDS will thereafter represent the appropriate number of shares of Class A common stock on a recombined or reclassified basis, as applicable, and the same principal amount of notes as it previously represented.

Will the IDSs be listed on an exchange?

Yes. We will apply to list our IDSs on the under the trading symbol " ."

Will the shares of Class A common stock and the notes be separately listed on an exchange?

The notes represented by the IDSs and the separate notes will not be listed on any exchange.

The Class A common stock and the notes represented by the IDSs and the separate notes offered by this prospectus will be freely tradeable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, unless they are purchased by affiliates as that term is defined in Rule 144 under the Securities Act.

In what form will IDSs, the shares of Class A common stock and the notes represented by the IDSs and the separate notes be issued?

The IDSs and the shares of our Class A common stock and notes represented by the IDSs and the separate notes will be issued in book-entry form only. This means that you will not be a registered

holder of IDSs, the securities represented by the IDSs or the separate notes, and you will not receive a certificate for your IDSs, the securities represented by the IDSs or the separate notes. You must rely on your broker or other financial institution that will maintain your book-entry position to receive the benefits and exercise the rights of a holder of IDSs and beneficial owner of our Class A common stock and the notes represented by your IDSs or a holder of separate notes.

Can I separate my IDSs into shares of Class A common stock and notes or recombine shares of common stock and notes to form IDSs?

Yes. Holders of IDSs, whether purchased in this offering or in subsequent offerings of IDSs of the same series, may, through their broker or other financial institution, separate the IDSs into shares of Class A common stock and the notes represented thereby at any time after the earliest of (1) 90 days from the closing of this offering, (2) the occurrence of a change of control repurchase offer or (3) the occurrence of an asset sale repurchase offer. Similarly, any holder of shares of Class A common stock and the notes may, at any time prior to automatic separation (discussed below), through his or her broker or other financial institution, recombine the applicable number of shares of Class A common stock and principal amount of notes to form IDSs. Separation and recombination of IDSs may involve transaction fees charged by your broker and/or financial intermediary. See "Description of IDSs — Voluntary Separation and Recombination."

Will my IDSs automatically separate into shares of Class A common stock and notes upon the occurrence of certain events?

Yes. Separation of all of the IDSs will occur automatically upon the redemption of all of the notes, upon maturity of the notes or upon certain bankruptcy events. See "Description of the IDSs — Automatic Separation." Therefore, in the event of the occurrence of such events, the holder of IDSs will become the holder of the interest in the shares of Class A common stock and the notes represented by the IDSs. Following any such automatic separation, shares of Class A common stock and the notes may no longer be combined to form IDSs.

What will happen if we issue additional IDSs or notes in the future?

We may conduct future financings by selling additional IDSs of the same series, which will have terms that are identical to those of the IDSs being sold in this offering, except that if they are issued 90 days or more from the closing of this offering, they will be immediately separable, and if they are issued less than 90 days from the closing of this offering, they will be separable on the same date as the IDSs issued in this offering may separate. Additional IDSs of the same series will represent the same proportions of Class A common stock and notes as are represented by the then outstanding IDSs. Although the notes represented by such IDSs will have terms that are substantially identical (except for the issuance date) to the notes being sold in this offering and will be part of the same series of notes for all purposes under the indenture relating to the notes, it is possible that the new notes will be sold with more than a de minimis amount of original issue discount, referred to as OID, for U.S. federal income tax purposes. We may also separately sell additional notes of the same series, which may also be sold with OID. If such notes represented by IDSs or sold separately are treated as issued with OID, or are issued subsequent to an automatic exchange of notes described below or if we otherwise determine that such notes need to have a new CUSIP number, all holders of IDSs of the same series, including the IDSs being offered hereby, and of outstanding notes not held in IDSs, will automatically exchange a ratable portion of their outstanding notes for a portion of the new notes, whether held directly or in the form of IDSs, and will thereafter hold a unit consisting of new notes and old notes with a new CUSIP number, or a new IDS consisting of such note unit and Class A common stock, with a new CUSIP number. As a result of such exchanges, we intend to allocate and report the OID associated with the new notes being sold among all holders of notes on a pro rata basis, which may

have adverse income tax effects for you. See "— What will be the U.S. federal income tax considerations in connection with a subsequent issuance of IDSs or notes?" In addition, if such notes are issued with any amount of discount, holders of such notes may not be able to recover the portion of their principal amount treated as unaccrued discount in the event of an acceleration of the notes or our bankruptcy prior to the maturity of the notes. See "Risk Factors — Risks Relating to the IDSs, including the Class A Common Stock and Notes Represented by the IDSs, and the Separate Notes — Subsequent issuances of notes of the same series may cause you to recognize original issue discount and may have other adverse consequences."

Immediately following any subsequent issuance of notes, we will file with the Securities and Exchange Commission a Current Report on Form 8-K or any other applicable form, disclosing the changes, if any, to the OID attributable to your notes as a result of such subsequent issuance.

In connection with the reclassification, we will issue shares of Class B common stock, a portion of which may be exchanged for IDSs on the 12^th day after the completion of the reclassification. It is not expected that the notes forming part of such IDSs will have OID. The remaining shares of Class B common stock will be, subject to certain exceptions, exchanged for IDSs two years following the closing of this offering. See "—The Transactions—Reclassification of Our Common Stock" for more information on the reclassification. The notes forming part of the IDSs that we issue in exchange for these shares of Class B common stock could be issued with OID. As a result, the effects of an issuance of notes with OID, as discussed above, may occur when the remaining Class B common stock issued in the reclassification will be exchanged for IDSs on , 2006; provided that, at such date, there is not a default or event of default under any of our indebtedness or our subsidiaries' indebtedness.

What will be the material U.S. federal income tax considerations in connection with an investment in IDSs or notes?

Certain aspects of the U.S. federal income tax consequences of the purchase, ownership, and disposition of the IDSs are not entirely clear. We intend to treat the purchase of IDSs in this offering as the purchase of shares of our Class A common stock and notes and, by purchasing IDSs, you will agree to such treatment. You must allocate the purchase price of the IDSs between those shares of Class A common stock and notes represented by the IDSs in proportion to their respective initial fair market values, which will establish your initial tax basis. We expect to report the initial fair market value of each share of Class A common stock as $ and the initial fair market value of each $ aggregate principal amount of our notes represented by the IDSs as $ , and by purchasing IDSs, you agree to be bound by this allocation, assuming an initial public offering price of $ per IDS, which represents the mid-point of the range set forth on the cover page of this prospectus.

We believe that the notes should be treated as debt for U.S. federal income tax purposes. If the notes were treated as equity rather than debt for U.S. federal income tax purposes, then the stated interest on the notes could be treated as a dividend, and would not be deductible by us for U.S. federal income tax purposes, which could materially increase our taxable income and significantly reduce our future cash flow.

Dividends paid on the Class A common stock through 2008, to the extent those dividends are paid out of our "earnings and profits" (as determined for U.S. federal income tax purposes), will generally be taxable to you at long-term capital gains rates under recently-enacted legislation. Interest income on the notes will be taxable to you at ordinary income rates.

Any payments of interest on the notes made to non-U.S. persons should generally be exempt from U.S. federal withholding taxes. Any dividend payments on our Class A common stock and any payments of interest on the notes represented by the IDSs that are treated as dividends for U.S.

federal income tax purposes (as discussed above) made to non-U.S. persons would generally be subject to U.S. federal withholding taxes at rates of up to 30%. Payments to non-U.S. holders would not be grossed-up on account of any such taxes. See "Material U.S. Federal Income Tax Considerations."

What will be the U.S. federal income tax considerations in connection with a subsequent issuance of IDSs or notes?

The U.S. federal income tax consequences to you of the subsequent issuance of notes with OID (and any issuance of notes thereafter) upon a subsequent issuance of IDSs or separate notes pursuant to an offering by us or upon the subsequent issuance by us of IDSs in exchange for Class B common stock are not entirely clear. The indenture governing the notes and the agreements with DTC will provide that, in the event there is a subsequent issuance by us of notes of the same series having substantially identical terms (except for the issuance date) as the notes represented by the IDSs or sold separately, and such subsequently issued notes are treated as issued with OID or are issued subsequent to an automatic exchange of notes described below or if we otherwise determine that such notes need to have a new CUSIP number, each holder of notes or IDSs (as the case may be) agrees that a portion of such holder's notes will be automatically exchanged for a portion of the notes acquired by the holders of such subsequently issued notes and the records of any record holders of the notes will be revised to reflect such exchanges. This may occur in connection with the exchange of the remaining portion of Class B common stock issued in the reclassification, that are not redeemed or exchanged on or prior to the 12^th day after the completion of the reclassification, which is expected to occur two years following the closing of this offering. Consequently, immediately following each such subsequent issuance and exchange, without any further action by such holder, each holder of notes or IDSs (as the case may be) will own an inseparable unit composed of notes of each separate issuance in the same proportion as each other holder (and, for any such holder of IDSs, such inseparable unit composed of notes will be included in such holder's IDSs). However, the aggregate stated principal amount of notes owned by each holder will not change as a result of such subsequent issuance and exchange. It is unclear whether the exchange of notes for subsequently issued notes results in a taxable exchange for U.S. federal income tax purposes, and it is possible that the Internal Revenue Service might successfully assert that such an exchange should be treated as a taxable exchange, resulting in the recognition of gain or loss. It is also possible that the Internal Revenue Service might successfully assert that any such loss should be disallowed under the "wash sale" rules. Regardless of whether a subsequent issuance results in a taxable exchange, such exchange may result in holders having to include OID in taxable income prior to the receipt of cash and other potentially adverse U.S. federal income tax consequences.

Following the subsequent issuance and exchange, we, and our agents, will report any OID on the subsequently issued notes ratably among all holders of notes or IDSs, and each holder of notes or IDSs will, by purchasing notes or IDSs, agree to report OID in a manner consistent with this approach. However, the Internal Revenue Service may assert that any OID should be reported only to the persons that initially acquired such subsequently issued notes (and their transferees) and thus may challenge the holders' reporting of OID on their tax returns. Such a challenge could create significant uncertainties in the pricing of the IDSs and notes and could adversely affect the market for IDSs and notes.

Because there is no statutory, judicial or administrative authority directly addressing the tax treatment of the IDSs or instruments similar to the IDSs, we urge you to consult your own tax advisor concerning the tax consequences of an investment in the IDSs and the separate notes. For additional information, see "Material U.S. Federal Income Tax Considerations."

Summary of Our Common Stock

Outlined below is a summary of the terms of our Class A common stock, shares of which are included in the IDSs, and certain terms of our Class B common stock and Class C common stock that are relevant to investors in the IDSs. See "Description of Capital Stock" for more information.

Issuer		Alaska Communications Systems Group, Inc.
Common Stock		We have authorized shares of Class A common stock, par value $0.01 per share.
		We also have authorized shares of Class B common stock, par value $0.01 per share, and authorized shares of Class C common stock, par value $0.01 per share.
		Unless the context otherwise requires, references to our "common stock" throughout this prospectus refer collectively to our Class A common stock, Class B common stock and Class C common stock.
Shares of Class A common stock represented by the IDSs to be offered by us		shares of Class A common stock ( shares if the underwriters exercise their overallotment option in full).
Shares of our common stock to be outstanding following the offering, reclassification and exchange of any shares of Class B common stock in excess of 10% of the overall value of our equity capitalization		shares of Class A common stock and shares of Class B common stock. No shares of Class C common stock will be outstanding upon the closing of this offering (there will be shares of Class A common stock and shares of Class B common stock if the underwriters exercise their overallotment option in full, following the redemption of shares of Class B common stock with net proceeds from the exercise of the over-allotment option).
Voting rights		Subject to applicable law, each outstanding share of our common stock will carry one vote per share. Shares of Class A common stock, Class B common stock and Class C common stock will vote together as one class on all matters submitted to a vote of stockholders.
		Shares of each class of common stock will have a separate class vote on any amendment to our certificate of incorporation that would adversely affect the rights of the holders of that class of common stock.
Listing		The shares of our Class A common stock will not be listed for separate trading on the until the minimum listing criteria on the are satisfied by our outstanding shares of Class A common stock no longer held in the form of IDSs for a period of 30 consecutive trading days. The minimum listing criteria on requires . See "Description of Capital Stock—Class A Common Stock—Listing" for more information.

		Following the 12^th day after the completion of the reclassification, we expect that our Class B common stock will be listed for trading on , subject to satisfying the minimum listing criteria. See "Description of Capital Stock—Class B Common Stock—Listing" for more information.
		The shares of our Class A common stock and Class B common stock will be freely transferable without restriction or further registration under the Securities Act, unless they are purchased by "affiliates" as that term is defined in Rule 144 under the Securities Act of 1933; provided, that shares of Class B common stock will not be transferable until the 12^th day after the completion of the reclassification.
		See "Description of Capital Stock" for more information.
Dividends		Quarterly dividends will be paid on our Class A common stock and our Class B common stock if and to the extent dividends are declared by our board of directors and permitted by applicable law and the terms of our then outstanding indebtedness. The indentures governing the ACSH notes, the new revolving credit facility and the indenture governing the notes will limit our ability to declare and pay dividends on our Class A common stock, our Class B common stock and our Class C common stock as described under "Dividend Policy and Restrictions."
		Upon the closing of this offering, our board of directors is expected to adopt a dividend policy which contemplates that, subject to applicable law and the terms of our then existing indebtedness, initial annual dividends will be approximately $ per share of our Class A common stock and $ per share of our Class B common stock. The initial dividend rate on the Class B common stock is expected to be equal to the weighted average of the quarterly interest rate on the notes plus the quarterly dividend yield on the Class A common stock.
		However, our board of directors may, in its discretion, modify or repeal this dividend policy. We cannot assure you that we will pay dividends at this level in the future or at all. See "Dividend Policy and Restrictions" and "Risk Factors — Risks Relating to the IDSs, including the Class A Common Stock and Notes Represented by the IDSs, and the Separate Notes — You may not receive the level of dividends provided for in the dividend policy our board of directors is expected to adopt upon the closing of this offering or any dividends at all."

		Dividends, if any, will be declared on the Class A common stock and the Class B common stock on a pro rata basis based on their respective dividend rates. We may not declare dividends on our Class A common stock unless at such time the corresponding proportionate dividend is declared on our Class B common stock.
Dividend payment dates		If declared, dividends on our Class A common stock and Class B common stock will be paid quarterly on , , , and to holders of record on the preceding , , , and , respectively.
Redemption and Exchange of Class B Common Stock		A portion of the shares of Class B common stock issued to our existing stockholders in the reclassification is subject to pro rata redemption with the net proceeds that we receive in any sale of IDSs upon any exercise of the underwriters' overallotment option. On the 12^th day after the completion of the reclassification, any outstanding shares of Class B common stock issued in the reclassification (including any shares of Class B common stock remaining outstanding as a result of a non-exercise or partial exercise of the underwriters' overallotment option) in excess of 10% of the overall value of our equity capitalization will be automatically exchanged, on a pro rata basis, into IDSs identical to those sold in this offering. Any remaining outstanding shares of Class B common stock will be automatically exchanged into IDSs on the second anniversary of the closing of this offering; provided that, at such date, there is not a default or event of default under any of our indebtedness or our subsidiaries' indebtedness. If there is a default under any of our indebtedness or the indebtedness of our subsidiaries on the second anniversary of the closing of this offering, the shares of Class B common stock will be automatically exchanged into IDSs at the time such default is cured, waived or otherwise ceases to exist. Any such exchange will be based on a ratio of one IDS per share of Class B common stock (as may be adjusted for stock splits, dividends, combinations or reclassifications).

Summary of the Notes

Please see "Description of Notes" for more information regarding the terms of the notes included in the IDSs and the separate notes.

Issuer	Alaska Communications Systems Group, Inc.
Notes	% Senior Subordinated Notes due 2014.
Principal amount of notes represented by the IDSs to be offered by us	$ million ($ million, if the underwriters exercise their overallotment option in full).
Principal amount of separate notes to be offered by us	$ million.
Principal amount of notes to be outstanding following the offering	$ million ($ million, after the Transactions).
Maturity	, 2014. We may extend the maturity of the notes for two additional successive five-year terms if the following conditions are satisfied:
	•	either (A) during the twelve month period ending on the last day of the applicable fiscal quarter (which may be any fiscal quarter ending not more than 18 months nor less than 45 days before the end of the then-current term), our ratio of debt to Indenture EBITDA is less than to 1 or (B) our Indenture Adjusted EBITDA Coverage Ratio is at least to 1 for the twelve month period ending on the last day of the applicable fiscal quarter;
	•	as of the date when we elect to extend such maturity, which we refer to as the extension date, no event of default has occurred and is continuing with respect to the notes;
	•	as of the extension date, no event of default has occurred and is continuing with respect to any other indebtedness of us or any restricted subsidiary or could occur as a result of such extension, including under any designated senior debt; and
	•	as of the extension date, there is no interest due but unpaid on the notes or any other indebtedness of us or any of our subsidiaries.
Interest rate	% per year.
Interest payment dates	Interest on the notes will be payable quarterly on , , , and , commencing on , 2004. We will make each interest payment to the holders of record on the immediately preceding , , and .
Ranking	The notes will be our unsecured senior subordinated debt. Accordingly they will:
	•	be subordinated in right of payment to all our existing and future senior debt;
	•	be effectively subordinated to all our and our subsidiaries' secured debt to the extent of the value of the assets securing such debt;

	•	be effectively subordinated to all liabilities (including trade payables) and preferred stock of any non-guarantor subsidiary;
	•	rank equally in right of payment with all our existing and future senior subordinated debt; and
	•	be senior in right of payment to all our existing and future subordinated obligations.
	If this offering and the other Transactions had been completed as of December 31, 2003, the notes would have been subordinated to $189.9 million of our senior debt, of which $182.0 million would have consisted of indebtedness under ACSH's 9⁷/8% senior notes due 2011. We may in the future refinance other subordinated debt which could increase the debt to which these notes would be subordinated.
Guarantees	The notes will be unconditionally guaranteed on an unsecured senior subordinated basis by each of our existing and future direct and indirect domestic subsidiaries (other than unrestricted subsidiaries), which we refer to as the guarantors. Each guarantee will:
	•	be a general unsecured obligation of the applicable guarantor;
	•	be subordinated in right of payment to all existing and future senior debt of the applicable guarantor;
	•	be effectively subordinated to any secured debt of the applicable guarantor and its subsidiaries to the extent of the value of the assets securing such debt.
	•	rank equally in right of payment with all existing and future senior subordinated debt of the applicable guarantor; and
	•	be senior in right of payment to all existing and future subordinated obligations of the applicable guarantor.
	If this offering and the related transactions had been completed as of December 31, 2003, the guarantees would have been subordinated to $189.9 million of senior debt of the guarantors, of which $182.0 million would have consisted of indebtedness under ACSH's 9⁷/8% senior notes due 2011.
Optional Redemption	We may not redeem the notes prior to , 2009. After , 2009, we may redeem the notes in whole or in part, on not less than 30 nor more than 60 days' prior notice, at the redemption prices described in the section "Description of Notes — Optional Redemption," plus accrued and unpaid interest.
	In addition, before , 2007, we may redeem up to 35% of the notes at %, plus accrued and unpaid interest to the redemption date, with the net proceeds of certain equity offerings. Following any redemption, shares of Class A common stock and notes may no longer be combined to form IDSs.

Change of Control	Upon the occurrence of a change of control, as defined under "Description of Notes — Change of Control," we must offer to repurchase the notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of repurchase.
	In order to have notes forming part of an IDS repurchased pursuant to a change of control repurchase offer, a holder must separate the notes and Class A common stock represented by the IDS.
Procedures Relating to Subsequent Issuances	The indenture governing the notes will provide that, in the event there is a subsequent issuance of notes, the additional notes, each holder of the notes, including those holders of the separate notes offered hereby, or the IDSs (as the case may be) agrees that a portion of such holder's notes (whether held directly in book-entry form or held as part of IDSs) may be exchanged, without any further action of such holder, for a portion of the additional notes purchased by the holders of such additional notes, such that following any such additional issuance and exchange each holder of the notes or the IDSs (as the case may be) owns an indivisible unit composed of the notes and additional notes of each issuance in the same proportion as each other holder, and the security registers for the IDSs and notes will be revised to reflect each such exchange without any further action of such holder. The aggregate principal amount of the notes owned by each holder will not change as a result of such exchange. Any additional notes will be guaranteed by the guarantors on the same basis as the notes. See "—Summary of the IDSs and the Notes—What will happen if we issue additional IDSs or notes in the future" and "Material U.S. Federal Income Tax Considerations—Consequences to U.S. Holders—Notes—Additional Issuances."
Restrictive Covenants	The indenture governing the notes will contain covenants that will limit, among other things, our ability and the ability of our restricted subsidiaries to:
	•	incur additional debt;
	•	pay dividends on or repurchase our capital stock;
	•	make certain investments;
	•	sell certain assets and subsidiary stock;
	•	enter into certain types of transactions with affiliates;
	•	sell or issue capital stock of restricted subsidiaries;
	•	create liens;
	•	enter into sale/leaseback transactions; and
	•	consolidate or merge with other entities or transfer all or substantially all of our assets.
	These covenants are subject to important exceptions and qualifications, as described under "Description of Notes."
Listing	We do not anticipate that our notes will be separately listed on any exchange.

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA

The summary historical financial data as of December 31, 2002 and 2003, and for the years ended December 31, 2001, 2002 and 2003 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary historical financial data as of December 31, 1999, 2000, and 2001, and for the years ended December 31, 1999 and 2000 have been derived from our audited consolidated financial statements for those years, which have not been included in this prospectus. The summary historical financial data as of and for the year ended December 31, 1999 represent our consolidated statement of operations and cash flow data from May 14, 1999, the date upon which we completed the acquisition of four local telephone companies in Alaska, through December 31, 1999.

The summary unaudited pro forma financial data as of and for the year ended December 31, 2003 has been prepared to give pro forma effect to the following as if they had occurred on December 31, 2003 in the case of summary unaudited pro forma balance sheet data and other data and on January 1, 2003 in the case of all unaudited pro forma statement of operations data:

•: the initial public offering of the IDSs (assuming the underwriters do not exercise their overallotment option) and the concurrent offering of separate notes;
•: the reclassification of shares of our existing common stock into shares of Class B common stock and cash;
•: the automatic exchange of any shares of our Class B common stock in excess of 10% of the overall value of our equity capitalization into IDSs on a pro rata basis on the 12^th day after the completion of the reclassification (assuming the underwriters do not exercise their overallotment option);
•: the repayment and termination of our existing credit facility;
•: the entering into of the new revolving credit facility;
•: the redemption or repurchase of the senior discount debentures; and
•: the initiation of the interest rate swap arrangements.

The unaudited pro forma statement of operations data also assumes that the sale of substantially all of our Directories Business had occurred on January 1, 2003.

The summary pro forma data are for informational purposes only and should not be considered indicative of actual results that would have been achieved had the transactions described above actually been completed on the dates indicated and do not purport to indicate balance sheet data, results of operations, cash flows, or other data as of any future date or for any future period.

The following data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Consolidated Financial Information," and our consolidated financial statements and related notes thereto included elsewhere in this prospectus.

			Year Ended December 31,															Pro Forma Year Ended December 31, 2003
			1999			2000			2001			2002			2003			Pro Forma Year Ended December 31, 2003
			(dollars in thousands)
Statements of operations data:
	Operating revenues(1)		$	192,663		$	311,366		$	328,525		$	340,144		$	323,548		$
	Operating expenses(2)			176,084			277,598			281,402			360,745			360,775
	Loss (gain) on disposal of assets(3)			—			—			—			2,163			(112,622	)

	Operating income (loss)			16,579			33,768			47,123			(22,764	)		75,395
	Interest expense(4)			(42,877	)		(64,559	)		(60,157	)		(51,704	)		(71,470	)
	Interest income and other(5)			1,023			6,609			3,250			2,203			(10,191	)
	Equity in income (loss) of investments			(198	)		(303	)		69			—			783

	Loss before income taxes, discontinued operations and cumulative effect of change in accounting principle			(25,473	)		(24,485	)		(9,715	)		(72,265	)		(5,483	)
	Income tax expense (benefit)			(301	)		(197	)		(195	)		—			1,095

	Loss from continuing operations			(25,172	)		(24,288	)		(9,520	)		(72,265	)		(6,578	)
	Loss from discontinued operations(6)			(306	)		(917	)		(1,718	)		(7,632	)		(52	)

	Loss before cumulative effect of change in accounting principle			(25,478	)		(25,205	)		(11,238	)		(79,897	)		(6,630	)
	Cumulative effect of change in accounting principle(7)			—			—			—			(105,350	)		—

	Net loss		$	(25,478	)	$	(25,205	)	$	(11,238	)	$	(185,247	)	$	(6,630	)	$

Balance sheets data (at end of period):
	Cash and cash equivalents		$	101,994		$	61,896		$	41,012		$	18,565		$	97,798		$
	Working capital(8)			96,623			53,105			31,214			21,893			94,872
	Total assets			973,909			953,660			949,095			752,509			685,391
	Total obligations, including current portion			612,756			614,004			611,250			607,763			550,220
	Total stockholders' equity			247,968			215,380			191,687			8			1,860
Statements of cash flows data:
	Net cash provided by operating activities		$	44,033		$	48,493		$	75,263		$	64,827		$	50,249		$
	Net cash provided (used) by investing activities			(774,653	)		(74,699	)		(94,483	)		(78,571	)		106,679
	Net cash provided (used) by financing activities			832,614			(13,892	)		(1,664	)		(8,703	)		(77,695	)
Other financial data:
	Indenture EBITDA(9)		$	63,549		$	116,710		$	128,535		$	119,782		$	112,522		$
	Indenture Adjusted EBITDA(9)			55,032			102,270			111,470			107,897			112,155
	Depreciation and amortization			40,141			71,755			79,108			82,940			82,185
	Goodwill impairment loss			—			—			—			64,755			—
	Capital expenditures			74,828			72,253			87,582			71,464			50,744
	Asset impairment losses:
		Operating		—			—			—			—			54,858
		Non-operating		—			—			—			—			15,924
	Ratio of net debt to Indenture EBITDA(10)						4.73	x		4.44	x		4.92	x		4.02	x
	Ratio of net debt to Indenture Adjusted EBITDA(11)						5.36	x		5.12	x		5.46	x		3.84	x
	Ratio of earnings to fixed charges(12)			0.4	x		0.6	x		0.8	x		*			0.9	x

		Year Ended December 31,
		1999		2000		2001		2002		2003
Other data (at end of period):
	*Local telephone*
	Retail access lines		281,726		272,936		261,002		236,148		220,818
	Wholesale access lines		15,680		17,303		22,859		22,148		19,157
	Unbundled network elements		28,202		39,221		49,062		64,711		74,246

	Total local telephone access lines		325,608		329,460		332,923		323,007		314,221

*Wireless*(13)
Estimated covered population		460,802			462,057			468,622			478,413			480,422
Subscribers		73,068			75,933			80,120			82,220			87,017
Penetration		15.9	%		16.4	%		17.1	%		17.2	%		18.1	%
Average monthly churn		1.7	%		1.6	%		1.5	%		1.7	%		1.5	%
Average revenue per unit	$	43.02		$	46.03		$	44.74		$	44.33		$	45.84
*Internet*(14)
DSL subscribers					3,269			7,041			12,590			17,780
Total subscribers					45,865			46,476			46,381			46,057

(1): For the year ended December 31, 2002, operating revenues include $11,066 of previously deferred interstate access revenue related to a dispute that was recognized during the year based on a favorable ruling by the District of Columbia Court of Appeals.
(2): For the year ended December 31, 2000, operating expenses include $5,288 of unusual charges, which consisted of $3,019 of severance and restructuring charges, $1,451 of costs incurred in connection with an attempted acquisition, and $818 related to a legal settlement. Operating expenses for the year ended December 31, 2002 include a $64,755 charge related to the impairment of goodwill incurred as a result of our annual goodwill impairment analysis, the write-off of $875 related to a previously deferred regulatory asset, $1,000 of severance and restructuring related costs, and $325 of other costs. For the year ended December 31, 2003, we recorded $54,858 in contract termination and asset impairment charges which is included in operating expenses.
(3): For the year ended December 31, 2003, we recognized a gain on disposition of our Directories Business of $113,518.
(4): As a result of the refinancing of a portion of our debt in August 2003 we incurred a $13,052 write-off of deferred financing costs that is included in interest expense for the year ended December 31, 2003.
(5): Included in interest income and other for the year ended December 31, 2003 is an impairment charge of $15,924 on non-operating assets and a gain on foreign exchange of $4,261.
(6): In March of 2002, we approved a plan to discontinue and sell our wireless television operations. As a result, the operating income and expense of this segment has been classified as a discontinued operation for all periods presented.
(7): Effective January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. As a result of this adoption, we recorded a goodwill impairment charge of $105,350 on January 1, 2002 as a cumulative effect of a change in accounting principle.
(8): "Working capital" represents total current assets less total current liabilities.
(9): The indenture governing the notes contains various restrictive covenants, including several that are based on a formulation of the financial measure EBITDA, which is net income (loss) adjusted to exclude interest, taxes, depreciation and amortization, certain non-cash charges, any extraordinary or otherwise nonrecurring gain or loss, and certain other items. We refer to this formulation of EBITDA as "Indenture EBITDA." See "Description of Notes — Certain Definitions." The indenture governing the notes provides that, in order to enter into certain types of transactions, including the incurrence of additional indebtedness, the making of restricted payments and the completion of mergers and consolidations, we must meet a maximum Debt to Indenture EBITDA ratio. Indenture EBITDA is included in this prospectus to provide additional information with respect to our ability to incur debt and make cash distributions to IDS holders. The indenture governing the notes further adjusts Indenture EBITDA to exclude other non-cash charges, disposals of assets, results from operations of terminated contracts, management fees and certain acquisition costs. We refer to this financial measure as "Indenture Adjusted EBITDA." See "Description of Notes — Certain Definitions." The indenture governing the notes allows us to extend the maturity of the notes past 2014, if, among other things, our debt to Indenture EBITDA ratio is less than to 1 or our Indenture Adjusted EBITDA Coverage Ratio is at least to 1 during specified periods.

While Indenture EBITDA, Indenture Adjusted EBITDA and similar variations thereof are frequently used as a financial measure of operations and of ability to meet debt service or distribution requirements, these terms are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation. Indenture EBITDA and Indenture Adjusted EBITDA are financial measures that are not prescribed by accounting principles generally accepted in the United States, or GAAP. As such, we encourage investors not to use these financial measures as substitutes for the determination of net income, operating cash flow or other similar GAAP financial measures of operating performance, and to use them primarily for purposes of determining covenant compliance described above.

We have reconciled net cash provided by operating activities, a comparable GAAP financial measure, to Indenture EBITDA and Indenture Adjusted EBITDA in the following table:

			Year Ended December 31,															Pro Forma Year Ended December 31, 2003
			1999			2000			2001			2002			2003			Pro Forma Year Ended December 31, 2003
			(dollars in thousands)
Net cash provided by operating activities			$	44,033		$	48,493		$	75,263		$	64,827		$	50,249		$
	Net cash used in discontinued operation			141			407			1,015			649			41
Adjustments to reconcile net cash provided by operating activities to net loss:
	Loss on discontinued operations			(306	)		(917	)		(1,718	)		(7,632	)		(52	)
	Cumulative effect of change in accounting principle			—			—			—			(105,350	)		—
	Depreciation and amortization			(40,141	)		(71,755	)		(79,108	)		(82,940	)		(82,185	)
	Loss on disposal of assets and asset impairment charges, net			—			—			—			(2,163	)		48,863
	Goodwill impairment loss			—			—			—			(64,755	)		—
	Amortization of debt issuance costs, original issue discount and warrants			(3,193	)		(4,872	)		(4,644	)		(4,524	)		(17,048	)
	Non-cash stock based compensation expense			(6,145	)		—			—			—			(900	)
	Investment tax credits			301			197			195			—			—
	Other non-cash expenses			—			—			—			—			(4,118	)
	Capitalized interest			860			1,096			1,416			1,157			162
	Other deferred credits			(2,987	)		1,141			(418	)		(3,073	)		(1,643	)
	Changes in components of working capital:
		Accounts receivable and other current assets		(3,154	)		5,649			(95	)		4,722			(7,451	)
		Accounts payable and other current liabilities		(15,544	)		(3,560	)		(5,530	)		12,460			6,380
		Other		657			(1,084	)		2,386			1,375			1,072

Net loss				(25,478	)		(25,205	)		(11,238	)		(185,247	)		(6,630	)
Add (subtract):
	Interest expense			42,877			64,559			60,157			51,704			71,470
	Income tax expense (benefit)			(301	)		(197	)		(195	)		—			1,095
	Depreciation and amortization			40,141			71,755			79,108			82,940			82,185
	Previously deferred access revenue			—			—			—			(11,066	)		—
	Stock-based compensation			6,145			—			—			—			900
	Litigation reserves			—			—			—			—			3,880
	Pension expense, net of pension funding			—			—			—			—			238
	Noncash charges included in losses from discontinued operations			165			510			703			6,983			11
	Loss (gain) on disposal of assets			—			—			—			2,163			(112,622	)
	Goodwill impairment loss			—			—			—			64,755			—
	Asset impairment losses:
		Operating		—			—			—			—			42,187
		Non-operating		—			—			—			—			15,924
	Gain on foreign exchange			—			—			—			—			(4,261	)
	Recruiting, severance and restructuring costs			—			3,019			—			1,000			4,445
	Acquisition costs and other			—			2,269			—			1,200			1,029
	Loss associated with State of Alaska contract termination(i)			—			—			—			—			12,671
Cumulative effect of change in accounting principle(7)				—			—			—			105,350			—

Indenture EBITDA			$	63,549		$	116,710		$	128,535		$	119,782		$	112,522		$

Indenture EBITDA		$	63,549		$	116,710		$	128,535		$	119,782		$	112,522		$
Adjustments to Indenture EBITDA:
	Directories Business operations(ii)		(9,200	)		(15,822	)		(19,186	)		(19,434	)		(7,153	)
	State of Alaska contract operations(i)		—			—			—			5,783			5,726
	Fox Paine management fees and expenses(iii)		542			975			1,106			1,117			1,019
	Cash charges included in loss from discontinued operations		141			407			1,015			649			41

Indenture Adjusted EBITDA		$	55,032		$	102,270		$	111,470		$	107,897		$	112,155		$

(i): On September 15, 2003, we received notification from the State of Alaska that the state was terminating the Telecommunications Partnering Agreement with us and was initiating disentanglement procedures under the contract. We subsequently negotiated and agreed to a settlement agreement effective October 14, 2003. As of December 31, 2003, we completed the majority of the settlement agreement disentanglement obligations. All services provided by us to the State of Alaska after December 31, 2003 either have been transitioned to other service providers, at the State of Alaska's direction, or transitioned to our current commercial rates for such services. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Alaska Communications Systems Group" for more information.
(ii): On May 8, 2003, we completed the sale of a majority interest (87.42%) in our Directories Business. Subsequently, on August 27, 2003, we disposed of substantially all of our remaining interest in the Directories Business. As a result of these disposals, we own less than 0.1% of the Directories Business and accordingly since we no longer record the revenue and expenses associated with the Directories Business. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Alaska Communications Systems Group" for more information.
(iii): We eliminated the management fees and expenses paid to Fox Paine, other than those already included under (ii) above, as these fees and expenses will not be incurred after the Transactions are completed.

(10): "Ratio of net debt to Indenture EBITDA" is defined as net debt, which includes total debt less cash and cash equivalents, divided by Indenture EBITDA. The ratio has not been presented for 1999 because Indenture EBITDA in 1999 is for a period of less than a full year.
(11): "Ratio of net debt to Indenture Adjusted EBITDA" is defined as net debt, which includes total debt less cash and cash equivalents, divided by Indenture Adjusted EBITDA. The ratio has not been presented for 1999 because Indenture Adjusted EBITDA in 1999 is for a period of less than a full year.
(12): For the purposes of calculating the ratio of earnings to fixed charges, "earnings" represent loss before income taxes plus fixed charges. "Fixed charges" consists of expensed and capitalized interest, amortization of debt issuance costs, and the portion of rental expense which we believe is representative of the interest component of lease expense. For the years ended December 31, 1999, 2000, 2001, 2002 and 2003, there was a deficiency of earnings to fixed charges of $24,974, $23,985, $9,589, $72,265 and $6,578, respectively. For the year ended December 31, 2002, the ratio of earnings to fixed charges was negative.
(13): "Estimated covered population" is based on information compiled from population data published by the State of Alaska on an annual basis. "Subscribers" represents unique activated phone numbers on our wireless system. "Penetration" represents the percentage of the estimated covered population that are subscribers. "Churn" represents the percentage of total subscribers who leave or switch to another service provider. "Average Revenue Per Unit" or ARPU, represents the average monthly revenue per wireless subscriber.
(14): "DSL subscribers" represents unique activated digital subscriber lines. "Total subscribers" represents unique activated dial-up accounts plus DSL subscribers. No comparable data was available for 1999 as over 50% of the total subscriber base was added through our acquisition of an Internet service provider in 2000.

Pro Forma Interest and Dividend Distributions to IDS and Class B Common Stockholders

The following table shows what our funds available for distributions to IDS holders after capital expenditures and other commitments would have been for the year ended December 31, 2003 on a pro forma as adjusted basis assuming the Transactions and the disposition of the Directories Business had occurred on January 1, 2003 and management's estimate of the amount of capital expenditures needed to maintain the business and assuming the underwriters have not exercised their overallotment option. The actual amount of funds available to IDS holders for any period, whether before or after the completion of the Transactions, may vary from the amount set forth in the following analysis, and such variation could be material. This analysis is not a projection or forecast of future results. We have computed our funds available after capital expenditures and other commitments based on our calculation of Indenture Adjusted EBITDA, which is more fully described in "—Summary Historical and Pro Forma Consolidated Financial Data."

		Year Ended December 31, 2003
		(in thousands, except per IDS data)
Pro forma Indenture Adjusted EBITDA(1)		$
Management believes that the following capital expenditures will be used to maintain the assets of the business(2)
Management also believes that distributable amounts should be adjusted by the following:
	• Interest payable to third parties(3)
	• Income taxes(4)
	• Cash received under the interest rate swap arrangement(5)

Pro forma funds available for distributions to IDS holders and holders of our Class B common stock		$

Pro forma funds distributed:
	• IDS notes interest expense(6)
	• Class A common stock dividends(6)
	• Class B common stock dividends(6)

Total pro forma funds distributed		$

Pro forma distributions per IDS:
	• IDS notes interest expense(6)
	• Class A common stock dividends(6)

Total pro forma distributions per IDS		$

Pro forma dividends per share of Class B common stock(6)(7)		$

(1): See definition of pro forma Indenture Adjusted EBITDA and a reconciliation to net cash provided by operating activities included in footnote 10 to the "— Summary Historical and Pro Forma Consolidated Financial Data" above. Indenture Adjusted EBITDA is not a recognized GAAP financial measure. Therefore, Indenture Adjusted EBITDA may not be comparable to similar measures presented by other issuers or a substitute for GAAP financial measures, such as net cash provided by operating activities.
(2): Represents management's estimate of the amount of annual capital expenditures required to maintain the assets of the business. For the year ended December 31, 2003, capital expenditures were $50.7 million, of which $32.2 million was expended to maintain the assets of the business, $11.5 million was expended on our CDMA build, $3.5 million of DSL and other growth initiatives and $3.5 million was expended on the State of Alaska contract. We anticipate using cash on hand to fund planned growth capital expenditures of approximately $65 million for the next three years.
(3): Interest payable to third parties represents our expectation of interest payable in cash to other than IDS holders, including the interest payable on the separate notes but excluding the interest payable on the notes included in the IDSs, under the capital structure contemplated by the Transactions. Actual results could vary.
(4): Pro forma estimated income taxes assuming the Transactions and the disposition of the Directories Business had occurred at the beginning of the period. We do not expect to pay income taxes for several years.
(5): Represents management's estimate of the principal portion of cash to be received under the interest rate swap transactions as calculated under the effective interest method.
(6): Assumes the underwriters have not exercised their overallotment option in connection with the IDS offering and the automatic exchange of all the Class B common stock issued in the reclassification, in excess of 10% of the overall value of our equity capitalization, for IDSs has occurred.
(7): It is expected that dividends will be paid quarterly on our Class B common stock at a rate equal to the aggregate quarterly distrubutions paid on the IDS.

RISK FACTORS

An investment in the IDSs, our Class A common stock and the notes involves a high degree of risk. You should read and consider carefully each of the following factors, as well as the other information contained in this prospectus, before making a decision to invest in the IDSs, our Class A common stock and/or the notes. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently deem to be immaterial may also materially and adversely affect our business operations. Any of the following risks could materially adversely affect our business, financial condition, liquidity or results of operations. In such case, you may lose all or part of your original investment.

Risks Relating to the IDSs, Including the Class A Common Stock and Notes Represented by the IDSs, and the Separate Notes

Our substantial indebtedness could adversely affect our financial health and restrict our ability to pay interest and principal on the notes and to pay dividends with respect to our Class A common stock, represented by the IDSs and adversely affect our financing options and liquidity position.

We have now and, following the closing of this offering and the other Transactions, will continue to have a substantial amount of indebtedness. After giving effect to this offering and the other Transactions, we would have had total long-term obligations of $ million and a ratio of earnings to fixed charges, for the year ended December 31, 2003, of .

Our substantial level of indebtedness could have important consequences for you as a holder of an IDS or the separate notes. For example, our substantial indebtedness could:

•: make it more difficult for us to satisfy our obligations with respect to the notes and our other indebtedness and/or pay dividends on our Class A common stock and Class B common stock;
•: limit our flexibility to adjust to changing market conditions, reduce our ability to withstand competitive pressures and increase our vulnerability to general adverse economic and industry conditions;
•: place us at a competitive disadvantage to many of our competitors who are less leveraged than we are;
•: limit our ability to issue new IDSs or other equity;
•: limit our ability to borrow additional amounts for working capital, capital expenditures, future business opportunities, including strategic acquisitions and other general corporate requirements or hinder us from obtaining such financing on terms favorable to us or at all;
•: require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, future business opportunities and other general corporate purposes;
•: limit our flexibility in planning for, or reacting to, changes in our business and the industry and markets in which we operate;
•: make us more vulnerable to general economic and industry conditions; and
•: limit our ability to refinance our indebtedness.

Despite our substantial indebtedness, we and our subsidiaries may be able to incur substantial additional indebtedness in the future that would make it more difficult for us to satisfy obligations on

the notes and our other indebtedness and pay dividends on our Class A common stock and Class B common stock and further reduce the cash we have available to invest in our operations. If we do not generate sufficient cash flow to meet our debt service obligations and to fund our working capital requirements, we may need to seek additional financing or sell certain of our assets.

The terms of the indenture governing the notes, the terms of our new revolving credit facility and the terms of our other indebtedness, including the indentures governing the ACSH notes, allow us and our subsidiaries to incur additional indebtedness upon the satisfaction of certain conditions. See "Description of Notes" and "Description of Other Indebtedness." As of December 31, 2003, after giving effect to this offering and the other Transactions, we would have had $50 million available for additional borrowings under the new revolving credit facility. If new indebtedness is added to current levels of indebtedness, the related risks described above could intensify.

We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness, including the notes and amounts borrowed under the new revolving credit facility, and to fund planned capital expenditures and expansion efforts and any strategic acquisitions we may make, if any, will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive and other factors that are beyond our control.

Based on our current level of operations, we believe our cash flow from operations, together with available cash and available borrowings under the revolving credit facility, will be adequate to meet our future liquidity needs for at least the next twelve months. However, we cannot assure you that our business will generate sufficient cash flow from operations in the future, that our currently anticipated growth in revenues and cash flow will be realized on schedule or that future borrowings will be available to us in an amount sufficient to enable the repayment of indebtedness, including the notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of our debt, including the ACSH notes, the new revolving credit facility and the notes, on commercially reasonable terms or at all.

Your right to receive payments on the notes is junior to our existing senior indebtedness and possibly all of our future borrowings. Further, the guarantees of these notes are junior to all of the guarantors' existing senior indebtedness and possibly to all their future borrowings.

These notes and the guarantees are unsecured and rank junior to all of our and the guarantors' existing senior indebtedness, including our borrowings and the related guarantees by guarantors under the ACSH senior notes and the new revolving credit facility, and all of our and the guarantors' future senior indebtedness. As of December 31, 2003, after giving effect to this offering and the other Transactions, the notes would have been subordinated to approximately $189.9 million of our senior debt, of which $182 million would have consisted of indebtedness under ACSH's 9⁷/8% senior notes due 2011. In addition, approximately $50.0 million would have been available to us for borrowing as additional senior debt on a secured basis under the new revolving credit facility. We would also be permitted to borrow substantial additional indebtedness, including senior debt, in the future.

As a result of such subordination, upon any distribution to our creditors or the creditors of the guarantors in a bankruptcy, liquidation, reorganization or similar proceeding relating to us, the guarantors, our property or the guarantors' property, the holders our of senior debt and the senior debt of the guarantors will be entitled to be paid in full before any payment may be made with respect to the notes or the guarantees. In addition, all payments on the notes and the guarantees will be blocked

in the event of a payment default on certain designated senior debt, which will include debt under the new revolving credit facility, and may be blocked for up to 179 consecutive days in the event of certain non-payment defaults on such designated senior debt. In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to us or the guarantors, the indenture relating to the notes will require that amounts otherwise payable to holders of the notes in a bankruptcy or similar proceeding instead be paid to holders of senior debt until the holders of the senior debt are paid in full. As a result, holders of the notes may not receive all amounts owed to them and may receive ratably less than holders of trade payables and other unsubordinated indebtedness in any such proceeding.

Our secured creditors will be entitled to be paid in full from the proceeds from the sale of our pledged assets before such proceeds will be available for payments on the IDSs and the separate notes.

In addition to being contractually subordinated to all its existing and future senior debt, our obligations under the notes will be unsecured while our obligations under the new revolving credit facility will be secured by substantially all of our assets and those of our subsidiaries. If we become insolvent or are liquidated, or if payment under the new revolving credit facility is accelerated, the lenders under the new revolving credit facility will be entitled to exercise the remedies available to a secured lender under applicable law. These lenders will have a claim on all assets securing the new revolving credit facility before those proceeds would be available for distribution to our other creditors, including holders of the notes represented by IDSs and holders of the separate notes, or our equity holders, including holders of the Class A common stock represented by IDSs. We may not have sufficient assets remaining to pay amounts due on any or all of the notes then outstanding, including the notes represented by IDSs and the separate notes, or to make payments to our equity holders, including holders of the Class A common stock represented by IDSs.

As of December 31, 2003, after giving effect to this offering and the other Transactions, we would have had $7.9 million of secured indebtedness. In addition, borrowings under our new revolving credit facility are secured. As of December 31, 2003, on the same pro forma basis, we would have had $50.0 million available for borrowing on a secured basis under the new revolving credit facility. The new revolving credit facility, the indentures governing the ACSH notes permit and the indenture governing the notes will also permit us to incur additional secured indebtedness provided certain conditions are met.

Our debt instruments include restrictive and financial covenants that limit our operating flexibility.

Our new revolving credit facility will require us to maintain certain financial ratios and the new revolving credit facility, the indenture governing the notes and the indentures governing the ACSH notes contain covenants that, among other things, restrict our ability to take specific actions, even if we believe such actions are in our best interest. These include restrictions on our ability to:

•: issue certain preferred or redeemable capital stock or IDSs;
•: incur debt;
•: create liens;
•: pay dividends or distributions on, redeem or repurchase our capital stock;
•: make certain types of investments, loans, advances or other forms of payments;
•: issue, sell or allow distributions on capital stock of specified subsidiaries;
•: prepay or defease specified indebtedness, including the notes;

•: enter into transactions with affiliates; or
•: merge, consolidate or sell our assets.

Our ability to comply with the ratios may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Any failure to comply with the restrictions of the new revolving credit facility, the indenture governing the notes, the indentures governing the ACSH notes, or certain other current or future financing agreements may result in an event of default. Such default may allow our creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. Under such circumstances terms of the new revolving credit facility may prohibit us from making payments on the notes or issuing dividends on our Class A common stock. These creditors may also be able to terminate any commitments they had made to provide us with additional funds. See "Description of Notes" and "Description of Other Indebtedness," for more information on our restrictive and financial covenants.

You may not receive the level of dividends provided for in the dividend policy our board of directors is expected to adopt upon the closing of this offering or any dividends at all.

Our board of directors may, in its discretion, amend or repeal the dividend policy it is expected to adopt upon the closing of this offering. Our board of directors may decrease the level of dividends provided for in the dividend policy or entirely discontinue the payment of dividends. Future dividends with respect to shares of our capital stock, if any, will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions, business opportunities, provisions of applicable law and other factors that our board of directors may deem relevant. See "Dividend Policy and Restrictions."

Under Delaware law, our board of directors, and the board of directors for our corporate subsidiaries, may declare dividends only to the extent of our "surplus," which is defined as total assets at fair market value minus total liabilities, minus statutory capital, or if there is no surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. We may not have such a surplus or net profits available to make dividend distributions. At March 31, 2004 our surplus was $ . We have had net losses in each of the past five fiscal years.

The indenture governing the notes and the indentures governing the ACSH notes will allow us to declare and pay dividends on our Class A common stock and our Class B common stock only to the extent that we satisfy certain restrictive covenants in these indentures. We cannot guarantee that these restrictive covenants will allow us to declare and pay dividends on our Class A common stock at the levels anticipated by our dividend policy or at all.

Dividends on the Class A common stock and Class B common stock will rank pari passu, based on their respective dividend rates. We expect the dividend on the Class B common stock, which will be equal to a fixed quarterly payment of per share of Class B common stock, representing the value of the interest payment received on the note included in the IDS plus an amount equal to the dividend paid on the Class A common stock in any quarter, will be higher than the dividend rate on the Class A common stock. It is expected the dividend payment on the Class B common stock will be at a rate equal to the aggregate quarterly distributions paid on the IDS. If there is a limited amount of surplus or net profits available to make dividend distributions, because of the different dividend rates, the pro rata portion of the amount available to make dividend distributions distributed to the Class B common stockholders will be greater than that distributed to the Class A common stockholders. We may not declare dividends on our Class A common stock unless at such time the corresponding proportionate dividend is declared on our Class B common stock.

Additionally, funds available for dividend and interest payments would be reduced if the notes were treated as equity rather than debt for U.S. federal income tax purposes. In that event, the stated interest on the notes could be treated as a dividend, and interest on the notes would not be deductible by us for U.S. federal income tax purposes. Our inability to deduct interest on the notes could materially increase our taxable income and, thus, our U.S. federal and applicable state income tax liability.

The reduction or elimination of dividends may negatively affect the market price of the IDSs or the Class A common stock represented thereby. See "Dividend Policy and Restrictions" for further discussion.

We may amend the terms of our new revolving credit facility, or we may enter into new financing agreements that govern our senior indebtedness, and the amended or new agreements may significantly affect our ability to pay dividends on our Class A common stock and interest on the notes.

As a result of general economic conditions, conditions in the lending markets, the results of our business or for any other reason, we may elect or be required to amend or refinance our new revolving credit facility, at or prior to maturity, or enter into additional agreements relating to senior indebtedness. Regardless of any protection you have in the indenture governing the notes, any such amendment, refinancing or additional agreement may contain covenants which could limit in a significant way our ability to make interest payments on the notes and make dividend payments on our Class A common stock.

The indenture governing the notes, our new revolving credit facility and the terms of our other indebtedness permit us to pay a significant portion of our available funds to stockholders in the form of dividends.

Although the indenture governing the notes, the indentures governing the ACSH notes and our new revolving credit facility contain limitations on the payment of dividends on our Class A common stock and our Class B common stock, these agreements permit us to pay a significant portion of our available funds to our stockholders in the form of dividends. For example, in the indenture governing the notes, the covenant that restricts our ability to pay dividends and make other "restricted payments" will contain an initial basket in the amount of $ million, which would enable us to pay substantial dividends after the closing of this offering. Following the closing of this offering, we intend to pay a quarterly dividend on our Class A common stock and our Class B common stock, as described in this prospectus, see "Dividend Policy and Restrictions" and "Summary—Pro Forma Interest and Dividend Distributions to IDS Holders." Any amounts paid by us in the form of dividends will not be available in the future to satisfy our obligations under the notes.

The realizable value of our assets upon liquidation may be insufficient to satisfy claims.

At December 31, 2003, our assets included intangible assets in the amount of $79.4 million, representing approximately 11.6% of our total consolidated assets and consisting primarily of goodwill, wireless spectrum licenses and debt issuance costs. The value of these intangible assets depends significantly upon the success of our business as a going concern and our ability to manage the operations of businesses we acquire. If we are unable to manage our business successfully and integrate future acquisitions, the realizable value of these intangible assets may be substantially lower and may be insufficient to satisfy the claims of our creditors.

The U.S. federal income tax consequences of the purchase, ownership and disposition of IDSs are unclear.

No statutory, judicial or administrative authority directly addresses the treatment of the IDSs or instruments similar to the IDSs for U.S. federal income tax purposes. As a result, the U.S. federal

income tax consequences of the purchase, ownership and disposition of IDSs are unclear. We believe that an IDS should be treated as a unit representing a share of Class A common stock and $ principal amount of notes. However, the Internal Revenue Service or the courts may take the position that the notes included in the IDSs are equity, which could adversely affect the amount, timing and character of income, gain or loss in respect of your investment in IDSs, and materially increase our taxable income and, thus, our U.S. federal and applicable state income tax liability. This would reduce our after-tax cash flow and materially and adversely affect our ability to make interest and dividend payments on the notes, including the separate notes, and the Class A common stock. In addition, non-U.S. holders could be subject to withholding or estate taxes with regard to the notes included in the IDSs in the same manner as they will be with regard to the Class A common stock and it could subject us to liability for withholding taxes that were not collected on payments of interest. Payments to non-U.S. holders would not be grossed-up for any such taxes. For discussion of these tax-related risks, see "Material U.S. Federal Income Tax Considerations."

The notes may be subject to possible subordination or recharacterization in the event of a bankruptcy or insolvency.

In the event of our bankruptcy or insolvency, a party in interest may seek to subordinate the notes under principles of equitable subordination or to recharacterize the notes as equity. While we believe that any such attempt should fail, there can be no assurance as to the outcome of such proceedings. In the event a court subordinates the claims represented by the notes or recharacterize them as equity, we cannot assure you that you would recover any amounts owing on the notes and you may be required to return any payments made to you on account of the notes, potentially up to six years prior to our bankruptcy. In addition, should the court recharacterize the notes as equity, you may not be able to enforce the guarantees.

Subsequent issuances of notes may cause you to recognize original issue discount and may reduce your recovery in the event of bankruptcy.

The indenture governing the notes and the related agreements with the depository for the notes will provide that, in the event there is a subsequent issuance by us of notes of the same series having terms identical (except for the issuance date) to the notes, and such subsequently issued notes are treated as issued with more than a de minimis amount of original issue discount (referred to as OID) for U.S. federal income tax purposes or are issued subsequent to an automatic exchange of notes described below or if we otherwise determine that such notes need to have a new CUSIP number, each holder of notes or IDSs, as the case may be, agrees that a portion of such holder's notes will be automatically exchanged for a portion of the notes acquired by the holders of such subsequently issued notes, and the records of any record holders of notes will be revised to reflect such exchanges. Consequently, immediately following each such subsequent issuance and exchange, without any further action by such holder, each holder of notes or IDS, as the case may be, will own an inseparable unit composed of a proportionate percentage of both the old notes and the newly issued notes. However, the aggregate stated principal amount of notes owned by each holder will not change as a result of such subsequent issuance and exchange. Therefore, subsequent issuances of notes with OID pursuant to an offering of notes or IDSs by us, including the issuance of IDSs in exchange for shares of Class B common stock, may adversely affect your tax treatment by increasing the OID, if any, that you were previously accruing with respect to your notes. It is unclear whether the exchange of notes for subsequently issued notes results in a taxable exchange for U.S. federal income tax purposes, and it is possible that the Internal Revenue Service might successfully assert that such an exchange should be treated as a taxable exchange. Regardless of whether a subsequent issuance results in a taxable exchange, such exchange may result in holders having to include OID in taxable income prior to the

receipt of cash and other potentially adverse tax consequences to holders. See "Material U.S. Federal Income Tax Considerations."

Following any subsequent issuance of notes with OID, we (and our agents) will report any OID on the subsequently issued notes ratably among all holders of notes and IDSs, and each holder of notes or IDSs will, by purchasing notes or IDSs, agree to report OID in a manner consistent with this approach. However, there can be no assurance that the Internal Revenue Service will not assert that any OID should be reported only to the persons that initially acquired such subsequently issued notes (and their transferees). In such case, the Internal Revenue Service might further assert that, unless a holder can establish that it is not such a person (or transferee thereof), all of the notes held by such holder have OID. Any of these assertions by the Internal Revenue Service could create significant uncertainties in the pricing of IDSs and the notes and could adversely affect the markets for the IDSs and notes.

For a discussion of these tax-related risks, see "Material U.S. Federal Income Tax Considerations."

Holders of subsequently issued notes having any amount of discount may not be able under New York and federal bankruptcy law to collect the portion of their principal amount that represents unaccrued discount in the event of an acceleration of the notes or our bankruptcy prior to the maturity date of the notes. As a result, an automatic exchange that results in a holder receiving a note with discount could have the effect of ultimately reducing the amount such holder can recover from us in the event of an acceleration or bankruptcy.

The indenture governing the notes will contain no limit on the pricing of any additional notes or IDSs or the discount at which such notes may be sold upon issue. Accordingly, additional notes issued in the future may be issued at a very deep discount, which could cause the tax and bankruptcy risks described above to be very material to you as an investor in notes or IDSs in the event that we issue such additional notes or IDSs.

If we subsequently issue notes with significant original issue discount, we may not be able to deduct all of the interest on those notes.

It is possible that notes we issue in a subsequent issuance will be issued at a discount to their face value and, accordingly, may have "significant original issue discount" and thus be classified as "applicable high yield discount obligations" for U.S. federal income tax purposes. If any such notes were so treated, a portion of the OID on such notes may be nondeductible by us and the remainder would be deductible only when paid. This treatment would have the effect of increasing our taxable income and may adversely affect our cash flow available for interest payments on the notes and distributions to holders of our IDSs and our Class A common stock.

The allocation of the purchase price of the IDSs may not be respected.

The purchase price of each IDS must be allocated between the Class A common stock and notes in proportion to their respective fair market values at the time of purchase. By purchasing the IDSs, you will agree to and be bound by the allocation we make. If our allocation is not respected, it is possible that the notes will be treated as having been issued with OID (if the allocation to the notes were determined to be too high) or amortizable bond premium (if the allocation to the notes were determined to be too low) for U.S. federal income tax purposes. You generally would have to include OID in income in advance of the receipt of cash attributable to that income and would be able to elect to amortize bond premium over the term of the notes.

Ownership change will limit our ability to use certain losses for U.S. federal income tax purposes and may increase our tax liability.

The Transactions will result in an "ownership change" within the meaning of the U.S. federal income tax laws addressing net operating loss carryforwards, alternative minimum tax credits and other similar tax attributes. As a result of such ownership change, there will be specific limitations on our ability to use our net operating loss carryforwards and other tax attributes from periods prior to the Transactions. Although it is not expected that such limitations will materially affect our U.S. federal income tax liability in the near-term, it is possible in the future that such limitations could limit our ability to utilize such tax attributes and, therefore, result in an increase in our U.S. federal income tax liability. Such an increase would reduce the funds available for the payment of dividends and might require us to reduce or eliminate the dividends on our IDSs and Class A common stock.

You will be immediately diluted by $ per share of Class A common stock if you purchase IDSs in this offering.

If you purchase IDSs in this offering, you will experience an immediate dilution of $ per share of Class A common stock represented by the IDSs, which exceeds the entire price allocated to each share of Class A common stock represented by the IDSs in this offering because there will be a net tangible book deficit for each share of Class A common stock outstanding immediately after this offering. Our net tangible book deficiency as of December 31, 2003, after giving effect to this offering, would have been approximately $ million, or $ per share of Class A common stock.

Our capital structure after closing of this offering may limit our ability to market and issue equity-only securities.

As a result of the restrictions in the indenture governing the notes and the restrictions in the other agreements governing our indebtedness, we may be prevented from issuing additional IDSs in the future. In particular, we may only issue additional IDSs if we satisfy certain financial tests under the new revolving credit facility. If we are unable to issue additional IDSs, we may be forced to rely on equity-only securities as an additional source of capital. Although we are not contractually restricted from issuing certain equity-only securities, as a result of this offering and the reclassification, most of our equity holders will hold their investment in us in the form of IDSs, which represent both our Class A common stock and notes, and consequently equity-only securities may be a comparatively less attractive investment. Therefore, we cannot assure you that we will be able to issue equity-only securities on commercially reasonable terms, or at all.

We may not have the ability to raise the funds necessary to fulfill our obligations under the notes following a change of control. This would place us in default under the indenture governing the notes.

Upon the occurrence of certain specific kinds of change of control events, we will be required to offer to repurchase all of the outstanding notes. However, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase or that restrictions in the new revolving credit facility will not allow such repurchases. Our ability to repurchase these notes upon certain specific kinds of change of control events may be limited by the terms of our senior indebtedness and the subordination provisions of the indenture governing the notes. For example, the new revolving credit facility will prohibit us from repurchasing these notes after certain specific kinds of change of control events until we first repay debt under the new revolving credit facility in full or obtain a waiver from the lenders under our new revolving credit facility. If we fail to repurchase these notes in that circumstance, we will be in default under the indenture related to the notes and under the new revolving credit facility. Any future debt that we incur may also contain restrictions on repayment which come into effect upon certain specific kinds of change of control events. If a change of control

occurs, we cannot assure you that we will have sufficient funds to repay other debt obligations which we will be required to repay in addition to the notes. See "Description of Notes — Change of Control" and "Description of Other Indebtedness."

Federal and state statutes allow courts, under specific circumstances, to void the notes or the guarantees and require noteholders to return payments received from us or the guarantors.

If unpaid creditors of us or any guarantor initiate a bankruptcy case or lawsuit, the debt represented by the notes or the guarantees may be reviewed under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws. Under these laws, the notes or the guarantees could be voided, or claims in respect of the notes or the guarantees could be subordinated to our or the applicable guarantor's other debt, if, among other things, we or such guarantor, at the time we issue the notes or such guarantor enters into the guarantee, received less than reasonably equivalent value or fair consideration for issuing the notes or entering into the guarantee; and

•: was insolvent or rendered insolvent by reason of issuing the notes or entering into the guarantee; or
•: was engaged in a business or transaction for which our or such guarantor's remaining assets constituted unreasonably small capital; or
•: intended to incur, or believed that we or such guarantor would incur, debts or contingent liabilities beyond our or such guarantor's ability to pay such debts or contingent liabilities as they become due.

To the extent that the claims of the holders of these notes against us or any guarantor were subordinated in favor of other creditors of ours or such guarantor, such other creditors would be entitled to be paid in full before any payment could be made on these notes or the guarantees. If one or more of the guarantees is voided or subordinated, we cannot assure you that, after providing for all prior claims, there would be sufficient assets remaining to satisfy the claims of the holders of these notes.

In addition, any payment by us or a guarantor pursuant to the notes or the guarantees, as the case may be, could be voided and required to be returned to us or such guarantor, or to a fund for the benefit of the creditors of us or such guarantor.

If a guarantee were voided as a fraudulent conveyance or held unenforceable for any other reason, holders of these notes would be simply our creditors and creditors of our other subsidiaries that have validly guaranteed these notes. These notes then would be effectively subordinated to all obligations of the subsidiary whose guarantee was voided.

A court would likely find that neither we nor any guarantor received reasonably equivalent value or fair consideration for incurring our respective obligations under the notes and guarantees unless we or the subsidiary benefited directly or indirectly from the notes' issuance. In other instances, courts have found that an issuer did not receive reasonably equivalent value or fair consideration if the proceeds of the issuance were paid to the issuer's shareholders, although we cannot predict how a court would rule in this case.

The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, we or the guarantor would be considered insolvent if:

•: the sum of our or such guarantor's debts, including contingent liabilities, were greater than the fair saleable value of all of our or such guarantor's assets; or

•: if the present fair saleable value of our or such guarantor's assets were less than the amount that would be required to pay us or such guarantor's probable liability on our or such guarantor's existing debts, including contingent liabilities, as they become absolute and mature; or
•: we or such guarantor could not pay our or its debts or contingent liabilities as they become due.

Before this offering, there has not been a public market for our IDSs, the notes or shares of our Class A common stock and there has been a limited market for our existing common stock. The price of the IDSs may fluctuate substantially, which could negatively affect holders of IDSs.

The IDSs have no public market history. In addition, as the IDS is a new security there has not been an active market in the United States for securities similar to the IDSs. Our existing common stock is currently publicly traded and listed on the Nasdaq National Market, however, as a result of the IDS offering our existing common stock will be delisted from Nasdaq. Furthermore, prior to this offering, there has been limited trading volume in our existing common stock, averaging 21,321 shares per day from October 1, 2003 to December 31, 2003 and, prior to this offering, only approximately 29% of our existing common stock was held by stockholders other than management and affiliates of Fox Paine. Therefore, we cannot predict whether an active public market will develop for our IDSs following this offering.

We currently do not expect that an active trading market for our Class A common stock will develop after this offering or that an active trading market for the notes will develop. If the notes are redeemed or mature on certain bankruptcy events affecting us occur, the IDSs will automatically separate and you will then hold our Class A common stock and notes not in the form of an IDS. If a trading market for the IDSs or the Class A common stock represented thereby does develop, the market price will not be correlated to the market price of our current common stock. We do not expect to list our Class A common stock on any securities exchange until a sufficient number of our shares are no longer held in the form of IDSs to satisfy the minimum listing criteria of the , as described in "Description of Capital Stock—Class A Common Stock—Listing." We currently do not intend to list our notes on any securities exchange.

The initial public offering price of the IDSs and the offering price of the separate notes will be determined by negotiations among us and the representatives of the underwriters and may not be indicative of the market price of the IDSs or the separate notes after the offering. Factors such as quarterly variations in our financial results, announcements by us or others, developments affecting us, our customers, general interest rate levels and general market volatility could cause the market price of the IDSs or the separate notes to fluctuate significantly.

The limited liquidity of the trading market for the separate notes may affect the trading price of the separate notes.

We are separately offering $ million principal amount of the notes that will not be represented by the IDSs, reflecting % of the total outstanding notes (assuming the underwriters do not exercise their overallotment option). While the separate notes are part of the same series of notes as, and identical to, the notes represented by the IDSs at the time of the issuance of the separate notes, the notes represented by the IDSs will not be separable for up to 90 days and will not be separately tradeable until separated and, as a result, the trading market for the separate notes initially will be very limited. There can be no assurance that, after holders of the IDSs are permitted to separate their IDSs, a sufficient number of holders of IDSs will separate their IDSs into shares of our Class A common stock and notes to create a sizable and more liquid trading market for the notes. Trading markets for debt securities have generally treated debt securities issued in larger aggregate principal amounts more favorably than similar securities issued in smaller aggregate principal amounts

because of the increased liquidity created by potentially higher trading volumes with larger issuances. Therefore, because approximately 90% of the notes will initially be represented by the IDSs, it is likely that the separate notes will not trade at prices reflecting the aggregate principal amount of the combined issuance of notes included in the IDS offering and the separate notes offering. There can be no assurance as to the liquidity of any market for the separate notes that may develop, the ability of the holders of the separate notes to sell any of their separate notes and the price at which the holders of separate notes would be able to sell any of their separate notes.

If interest rates rise, the trading value of our IDSs or the separate notes may decline.

We cannot predict the interest rate environment or guarantee that interest rates will not rise in the near future. Should interest rates rise or should the threat of rising interest rates develop, debt markets may be adversely affected. As a result, the trading value of our IDSs, including the notes and our Class A common stock represented by the IDSs, and the separate notes may decline.

Future sales or the possibility of future sales of a substantial amount of IDSs, shares of our Class A common stock or notes, or sales or exchanges of our Class B common stock or Class C common stock, may depress the price of the IDSs and of our Class A common stock and the notes.

Future sales or the availability for sale of substantial amounts of IDSs or shares of our Class A common stock or a significant principal amount of the notes in the public market could adversely affect the prevailing market price of the IDSs, our Class A common stock and the notes and could impair our ability to raise capital through future sales of our securities.

We may issue shares of our Class A common stock and notes, which may be in the form of IDSs, or we may issue notes or Class B common stock or Class C common stock separately, or other securities from time to time as consideration for future acquisitions and investments. In the event any such acquisition or investment is significant, the number of shares of our Class A common stock and the aggregate principal amount of notes, which may be in the form of IDSs, or notes or Class B common stock or Class C common stock issued separately, or the number or aggregate principal amount of other securities that we may issue may be significant. In addition, we may also grant registration rights covering those IDSs, shares of our common stock, notes or other securities in connection with any such acquisitions and investments. See "Description of Capital Stock" for a summary of the material terms of our capital stock.

If the underwriters exercise their overallotment option in full, there will be additional IDSs outstanding. In addition, 12 days after the completion of the reclassification, a substantial portion of the Class B common stock that we issue in the reclassification will be exchanged for IDSs. These additional outstanding IDSs could further adversely affect prevailing market prices.

Subject to certain limitations, all of our outstanding shares of our Class B common stock will be automatically exchanged into IDSs on the second anniversary of this offering, which could adversely affect prevailing market prices and could impair our ability to raise capital through future sales of our securities.

We, all our executive officers and directors and Fox Paine and some of its affiliates have agreed that, for a period of 180 days from the date of this prospectus (other than in connection with the redemption or exchange of shares of Class B common stock described under "Description of Capital Stock—Class B Common Stock—Redemption; Exchange") we and they will not, without the prior written consent of each of the representatives of the underwriters, dispose of or hedge any IDSs, our Class A common stock, our Class B common stock or the notes, including the separate notes. The representatives of the underwriters, may release any of the securities subject to these lock-up agreements at any time without notice.

We will at the time of this offering enter into a registration rights agreement with Fox Paine and some of their affiliates. The registration rights agreement provides, among other things, that Fox Paine may require us, subject to certain limitations, to register with the SEC all or a portion of their IDSs, Class A common stock, notes or Class B common stock that they hold. If Fox Paine exercises these or other similar rights under the registration rights agreement to sell substantial amounts of IDSs, Class A common stock, notes or Class B common stock in the public market, or if it is perceived that such exercise or sale could occur, the market price of our IDSs, Class A common stock, notes or Class B common stock, as the case may be, may fall. See "Certain Relationships and Related Party Transactions—Registration Rights" for a summary of the terms of the registration rights agreement.

Holders of our existing common stock will hold all of our Class B common stock after the offering and the interests of such holders may conflict with your interests as holders of our IDSs or Class A common stock.

In connection with the reclassification, holders of our existing common stock will be receiving shares of Class B common stock. After giving effect to the Transactions, the Class B common stock will represent % of our total outstanding equity. Holders of our existing common stock, including Fox Paine, will beneficially own 100% of the outstanding shares of our Class B common stock and % of the outstanding shares of our voting capital stock ( % if the underwriters' overallotment option is exercised in full). Fox Paine will beneficially own % of the outstanding shares of Class B common stock and % of the outstanding shares of our voting capital stock ( % of our outstanding shares of Class B common stock and % of the outstanding shares of our voting capital stock if the underwriters' overallotment option is exercised in full). Shares of the Class A common stock represented by the IDSs and the Class B common stock issued in connection with the reclassification will vote as a class on all matters presented to the stockholders for a vote. However, the interest of the holders of the Class B common stock may be different than the interests of the holders of the Class A common stock and the holders of IDSs. As a result, the holders of our Class B common stock, including Fox Paine, will have the ability to exert significant influence over the outcome of matters requiring stockholder approval, including:

•: the election of directors and the directors of our subsidiaries;
•: the amendment of our charter or by-laws; and
•: the adoption or prevention of mergers, consolidations or the sale of all or substantially all of our assets or our subsidiaries' assets.

Finally, Fox Paine may in the future make significant investments in other telecommunications companies. Some of these companies may compete with us. Fox Paine and its affiliates are not obligated to advise us of any investment or business opportunities of which they are aware, and they are not restricted or prohibited from competing with us.

Our organizational documents could limit another party's ability to acquire us and deprive our investors of the opportunity to obtain a takeover premium for their securities.

A number of provisions in our Amended and Restated Certificate of Incorporation and amended and restated by-laws will make it difficult for another company to acquire us and for you to receive any related takeover premium for your securities. For example, our organizational documents provide that stockholders generally may not act by written consent and require advance notice of stockholder proposals and nominations. In addition, our Amended and Restated Certificate of Incorporation provides that directors can be removed without cause only upon the affirmative vote of 80% of the then outstanding shares of our capital stock generally entitled to vote in the election of directors. Our organizational documents also authorize the issuance of common stock and preferred stock without

stockholder approval and upon such terms as the board of directors may determine. The rights of the holders of shares of our common stock will be subject to, and may be adversely affected by, the rights of holders of shares of preferred stock that may be issued in the future.

Risks Related to Our Business

Our business is subject to extensive governmental legislation and regulation. Applicable legislation and regulations and changes to them could adversely affect our business.

We operate in a heavily regulated industry, and most of our revenues come from the provision of services regulated by the Federal Communications Commission, or FCC, and the Regulatory Commission of Alaska, or RCA. Laws and regulations applicable to us and our competitors may be, and have been, challenged in the courts, and could be changed by legislation or regulatory orders at any time. We cannot predict the impact of future developments or changes to the regulatory environment or the impact such developments or changes would have on us. See "Regulation."

There are a number of FCC rules under review that could have a significant impact on us. For example, many of the FCC's rules with regard to the provisioning of unbundled network elements, or UNEs, and other LEC interconnection rules were revised by the FCC in 2003 and are subject to further proceedings at the FCC and RCA. An appellate court recently vacated, remanded and upheld different portions of the FCC's order. This decision may be subject to further judicial review as well as regulatory proceedings. Rulings in this area could affect our obligation to provide UNEs and the prices we receive for the UNEs. Changes to intercarrier compensation that could affect our access revenues are also likely over the next few years. The FCC is also looking at universal service fund contribution and disbursement rules that are likely to affect the amount and timing of our contributions to and receipt of universal service funds; our obligations may increase and/or our revenue may decline, and our competitors receive greater payments. Further, most FCC telecommunications decisions are subject to substantial delay and judicial review. These delays and related litigation create risk associated with uncertainty over the final direction of federal policies.

In addition, the direction of state regulation under the RCA remains unclear. The RCA was formed in 1999 and is subject to periodic reauthorization. The RCA's ability to implement improved regulatory policies and practices was called into question by the Alaska legislature during the RCA's most recent reauthorization proceedings in 2003. While the RCA ultimately received reauthorization through 2007, the legislature did provide guidance on certain telecommunications policies, and it continues to scrutinize the regulatory process. Given the large number of proceedings currently before the RCA, including those addressing various aspects of local exchange competition, market structure, bundling, access charges, retail rates, and UNE rates, the continuing debate over regulatory policy and the recent seating of a majority of new commissioners creates uncertainty regarding the timing and direction of state regulatory policies.

As the ILEC in our service areas, we are subject to legislation and regulation that are not applicable to our competitors.

Existing federal and state rules impose obligations and limitations on us, as the incumbent local telephone company, or ILEC, that are not imposed on our competitors. Federal obligations to share facilities, file and justify tariffs, maintain certain types of accounts, and file certain types of reports are all examples of disparate regulation. Similarly, state regulators impose limitations on bundling, require structural separations between affiliated entities, and impose accounting and reporting requirements and service obligations on us that do not exist for our competitors. In addition, state regulators have imposed greater tariffing standards and obligations on us than on our competitors, have required us to operate our business segments separately, and have prohibited our ILECs from promoting our long

distance services more favorably than our competitors. The requirement to disclose proposed tariffs six to 12 months before they go into effect has enabled our competitors to plan competitive responses before we are able to implement new rates, diminishing our ability to compete in the marketplace. As our business becomes increasingly competitive, the continued regulatory disparity could impede our ability to compete in the marketplace, which could have a material adverse effect on our business.

A reduction by the RCA or the FCC of the rates we charge our customers would reduce our revenues and earnings.

The rates we charge our local telephone customers are based, in part, on a rate of return authorized by the RCA on capital invested in our LECs' networks. These authorized rates, as well as allowable investment and expenses, are subject to review and change by the RCA at any time. If the RCA orders us to reduce our rates, both our revenues and our earnings will be reduced.

As a condition to granting its approval of our 1999 acquisitions of four local telephone companies in Alaska, the Alaska Public Utilities Commission, or APUC, the predecessor of the RCA, required that we file, by July 1, 2001, revenue-requirement, cost-of-service and rate-design studies that showed our earnings levels for the year ended December 31, 2000. The revenue-requirement phase has now been completed for our Anchorage local exchange carrier and our three rural LECs. ACS of Anchorage, Inc. (or ACSA) and ACS of Alaska, Inc., (or ACSAK), were found to be underearning, while ACS of Fairbanks, Inc., or ACSF, and ACS of the Northland, Inc., or ACSN (covering the most rural communities), were found to be overearning.

Generally, overearnings lead to reduced rates and reduced revenue while underearnings result in increased rates and increased revenue, but there are a number of factors that influence the results, including changes in demand, competitive pressures, and alternative recovery mechanisms. As a result of these rulings, retail local telephone rates, intrastate access charges or both will be reduced by ACSN and ACSF. ACSA and ACSAK have been allowed by the RCA to raise rates, but their ability to realize increased revenue in competitive markets is limited.

ACSF, ACSAK, and ACSN have submitted a stipulation on final rates to the RCA for its review. A hearing on these rates took place on February 20, 2004. If approved, the stipulation will set new rates during the second quarter of 2004 that will have a net negative impact on revenues.

A hearing on retail rates for ACSA is currently scheduled for December 2004 and new rates for ACSA are not expected until sometime during the first half of 2005, but there can be no assurance that our rates will be implemented on this schedule or at rates sufficient to recover our revenue deficiency. State regulators may rebalance our planned rates or set new rates closer to costs, and refuse to keep sensitive business information confidential, continuing our competitive disadvantage in the marketplace. Our local exchange service competitors may also gain a competitive advantage as a result of the state regulators permitting our competitors to intervene in rate-setting proceedings. Also, interconnection duties are governed by telecommunications rules and regulations related to the UNEs that must be provided. These rules and regulations remain subject to ongoing modifications. See "— Our business is subject to extensive governmental legislation and regulation. Applicable legislation and regulations and changes to them could adversely affect our business."

FCC regulations also affect rates that are charged to customers. The FCC regulates tariffs for interstate access and subscriber line charges, both of which are components of our network service revenue. The FCC currently is considering proposals to reduce interstate access charges for carriers like us. If the FCC lowers interstate access charges without adopting an adequate revenue replacement mechanism, we may be required to recover more revenue through subscriber line charges and universal service funds or forego this revenue altogether. This could reduce our revenue or impair our competitive position.

The rates, terms and conditions for the leasing of facilities and resale of services in Anchorage are subject to regulatory review and may be adjusted in a manner adverse to us.

The rates for the leasing of facilities in Anchorage by competitors, including General Communication, Inc., or GCI, has been at issue since January 2000. An RCA hearing was held in November 2003 and a decision is pending. There is risk that the rates will remain unresolved for a substantial period of time. There is also risk that the RCA may continue the practice of setting facility lease rates below what we believe to be compensatory levels. Conversely, if the RCA sets lease rates that are more favorable to us, there is a risk that doing so will encourage GCI to provide service over its own facilities, further reducing our revenues. There is also a risk that, aside from rates, the RCA could order us to enter into an agreement with unfavorable contract terms. Finally, there is the risk that the entire matter may be subject to judicial appeal, which would result in an extended period of uncertainty and additional cost associated with the proceedings.

Loss of the exemption from certain forms of competition granted to our rural LECs under the Federal Telecommunications Act of 1996 exposes us to increased competition.

Historically, our rural LECs (which do not include ACSA) operated under a federal statutory exemption under which they were not required to offer UNEs and wholesale discounted resale services to competitors. On June 30, 1999, the APUC issued an order revoking these rural exemptions. In July 1999 we sought reconsideration of this order from the RCA, and on October 11, 1999, the RCA issued an order sustaining the APUC decision. In December 2003, the Alaska Supreme Court issued a decision reversing the RCA's order as to ACSN, and remanding the matter back to the RCA for further proceedings as to ACSF and ACSAK.

Due to the loss of the regulatory exemptions and while the remand is pending, ACSF and ACSAK are obligated to continue to lease facilities to competitors for existing customers but not for new customers. Competitors, including General Communication, Inc., or GCI, however, can continue to serve new customers through wholesale discounted resale services. Absent a reinstatement of the statutory exemption, our rural LECs will continue to face local exchange service competition, further reducing revenues and returns. If the rural exemption is reinstated, the decision may be subject to judicial review and further uncertainty.

Among our rural companies, GCI currently has interconnection agreements with ACSF and ACSAK. The rates, terms, and conditions of these rural interconnection agreements were arbitrated and confirmed by the RCA in 2000. Interconnection duties are governed by telecommunications rules and regulations related to the UNEs that must be provided. These rules and regulations remain subject to ongoing modifications. See "— Our business is subject to extensive governmental legislation and regulation. Applicable legislation and regulations and changes to them could adversely affect our business." The existing ACSF and ACSAK agreements were scheduled to expire October 5, 2003, and have been extended for up to one year pending the outcome of the remand proceeding discussed above, and the decision on the Anchorage interconnection proceeding. Regardless of when the rates, terms and conditions are revised for ACSF and ACSAK, the parties have agreed to make the changes effective as of April 5, 2004. Although we believe that existing rates are less than compensatory for these ILECs, we cannot predict whether the rates or terms of the new interconnection agreements will be more favorable to our ILECs. To the extent that we receive more favorable rates and terms in a new interconnection agreement, or in the event the rural exemption is reinstated, GCI may elect to deploy service over its own facilities in these areas, further reducing our revenues. If we continue to be unable to charge rates that fairly compensate us for providing UNEs or discounted wholesale services, our financial and operating results could be adversely affected. In addition, to the extent that rural exemptions are terminated, other carriers are entitled to obtain interconnection agreements with us on the basis of picking and choosing elements from the GCI agreements. Finally, to the extent rates are

set substantially higher, that may encourage GCI or other competitors to provide service over their own facilities, further depriving us of revenue.

ACSA, ACSF and ACSAK have responded to a formal complaint brought by GCI at the FCC involving order processing and provisionally, provisioning performance metrics, and proposed prospective and retrospective remedies. The matter has been resolved through negotiation between the parties.

The telecommunications industry is extremely competitive, and we may have difficulty competing effectively.

The telecommunications industry is extremely competitive. Competition in the markets in which we operate could:

•: reduce our customer base;
•: require us to lower rates and other prices in order to compete;
•: require us to invest in new facilities and capabilities;
•: increase marketing expenditures and the use of discounting and promotional campaigns that would adversely affect our margins; or
•: otherwise lead to reduced revenues, margins, and returns.

In addition to losing potential customers to our existing competitors, we may also lose customers to new competitors who are encouraged by the FCC's pick-and-choose rule, which allows easier access for any new competitor in a market to pick and choose any portion of or all of an existing interconnection agreement for itself. We also face competition from wireless service providers for both our existing local and long distance customers, as well as potential local and long distance customers. While cellular wireless services have historically complemented traditional local exchange services, existing and emerging wireless technologies are increasingly competitive with local exchange services in some or all of our service areas. We and a competitor of ours are deploying a new generation of wireless technologies which will provide wireless data in addition to wireless voice services, and the FCC has ordered wireline-to-wireless number portability. As a consequence, we anticipate increased risk of wireless substitution for traditional local telephone services. Finally, GCI has announced plans to deploy cable telephony by the end of 2004 and migrate its customers served using our UNEs off of our network and onto its cable system. While we can neither confirm nor deny their plans, we understand that GCI has been actively testing its system and intends to migrate the bulk of its local telephone customers to its own network in the next few years. Such a migration would result in a significant reduction of revenue as GCI would no longer be leasing our facilities to serve those customers, which could have a material impact on our results of operations. In addition, new carriers offering voice over Internet Protocol, or VoIP, services may also lead to a reduction in traditional local telephone service customers and revenues as well as our network access revenues.

Wireless. With respect to our wireless services, we currently compete with at least one other wireless provider in each of our major service areas that provides statewide coverage. In addition, Dobson Cellular Systems, Inc., or Dobson, our main wireless competitor, also provides some coverage on its own network outside Alaska. Some of our competitors may have financial and technical resources greater than ours. In addition, competition may cause margins to decline.

Internet. In the highly competitive Internet access services business, we expect that competition will intensify in the future due to the absence of significant barriers to entry. We currently compete with a number of established online services companies, interexchange carriers and cable television operators, including GCI. Competition is particularly intense for broadband services. For instance, the

number of cable modems deployed by GCI is approximately three times the number of DSL modems deployed by us. The expected addition of wireless broadband to the mix of options available to consumers may reduce the demand for DSL. Additionally, there are no legal or regulatory restrictions to other competitors entering the marketplace.

Long distance. In long distance, we face competition primarily from AT&T Alascom and GCI, the two major long distance providers in Alaska, and we believe we currently have approximately 5% of total long distance revenue in Alaska. Previous attempts to increase our share of long distance services have not proven successful and we cannot predict the success of new efforts to do the same.

We also face competition from wireless service providers for long distance customers. In addition, new carriers offering VoIP services may lead to a reduction in traditional long distance telephone service customers and revenues. Another area of competition comes from the use of prepaid calling cards which reduces the traditional reliance on long distance telephone service, while also depriving us of revenues obtained by the use of our interexchange facilities. Expanded use of prepaid calling cards may have an adverse affect on the demand for our long distance services.

Revenues from our retail local telephone access lines may be reduced or lost.

As the ILEC, we face stiff competition mainly from resellers, local providers who lease UNEs from us, and, to a lesser degree, facilities-based providers of local telephone services. Seven years ago the two largest long distance carriers in Alaska began providing competitive local telephone services in Anchorage through UNE interconnection with our facilities and resale of our services. Interconnection agreements have since been executed with several other competitors, and an agreement is pending before the RCA with another competitor. As a result, since 1996 when the industry was opened to competition through December 31, 2003, we have lost approximately 30% of our retail local telephone lines. In our largest market, Anchorage, which opened to competition in 1996, we have lost approximately 50% of our retail local telephone access lines. Similarly, in Fairbanks and Juneau, where competition began only a few years ago, we have lost more than 20% of our retail local telephone access lines. While we generally continue to enjoy revenues for these lines from our competitors, albeit at reduced rates compared to retail customers, our competitors may, in the future, bypass or remove these customers from our network completely, which would eliminate our revenue from those lines altogether. Additionally, although we plan to reacquire customers previously lost to competitors, there can be no assurance that we will be successful in this regard.

Revenues from access charges may be reduced or lost.

We received 26.5% of our 2003 pro forma operating revenues from access charges paid by interstate and intrastate interexchange carriers and subscriber line charges paid end users for the use of our network to connect the customer premises to the interexchange network. The amount of revenue that we receive from access charges and subscriber line charges is calculated in accordance with requirements set by the FCC and the RCA. Any change in these requirements may reduce our revenues and earnings. Generally, access charges have decreased since our inception in 1999.

Under the regulatory rules that exist today, we receive access revenue related to the calls made by all of our retail customers as well as our competitors' customers who are served via wholesale resale service. Access revenue related to our competitors' retail customers that are served by UNEs or by the competitors' own facilities flows to our competitors. To the extent that competitors shift the form in which they provide service away from wholesale resale to UNEs or their own facilities, our access revenue will be reduced.

The FCC is reviewing mechanisms for intercarrier compensation, and some parties have suggested terminating all interstate access charge payments by interexchange carriers. In recent months, a coalition of the largest carriers in the country have supported this suggestion. If such a proposal is adopted, it could have a material impact on our revenue and earnings. In any event, the FCC has stated its intent to adopt some form of access charge reform soon, which more likely than not will reduce this source of revenue. Similarly, the RCA has issued draft regulations phasing out intra-state access charges over five years. Adoption of this intrastate access charge proposal may reduce our revenue.

In addition, both GCI and AT&T alleged that we collected excess interstate access revenue during the years 1997 through 2000. While those claims have been resolved, we cannot assure you that claims alleging excess charges in subsequent years will not be made, nor that we will be able to defeat all such claims.

A reduction in the universal service support currently received by some of our subsidiaries would reduce our revenues and earnings.

We received 4.9% of our 2003 pro forma operating revenues from the USF, which was established under the direction of the FCC to compensate carriers for the high cost of providing universal telecommunications services in rural, insular, and high-cost areas. If the support received from the USF is materially reduced or discontinued, some of our rural LECs might not be able to operate profitably. Also, because we provide interstate and international services, we are required to contribute to the USF a percentage of our revenue earned from such services. Although our rural LECs receive support from the USF, we cannot be certain of how, in the future, our contributions to the USF will compare to the support we receive from the USF.

Various reform proceedings are under way at the FCC to change the method of calculating the amount of contributions paid into the USF by all carriers and the amount of contributions or support rural carriers like ACSF, ACSAK and ACSN receive from the USF, as well as the amount of support received by our competitors. On February 27, 2004, a Federal-State Joint Board recommended certain reforms to the FCC, such as limiting support to just one line per customer, raising the minimum requirements for receiving support, and limiting per-line support in areas subject to competition, that could significantly reduce USF support to us. In addition, Congress has indicated it might step in to remedy some of the perceived problems of USF, i.e., that the size of the fund is growing too much and demanding too much of the interexchange carriers and others that pay into the USF. Already the FCC has imposed caps or limits on the amount of USF distributed and has explored opportunities to obtain contributions from providers of services not currently contributing to USF. We cannot predict at this time whether or when any change in the method of calculating contributions and support may affect our business.

The RCA has granted Eligible Telecommunications Carrier, or ETC, status to GCI in Fairbanks and Juneau. Under current FCC rules, this entitles GCI to the same amount of per-line USF support that we are entitled to receive regardless of GCI's costs, and may reduce the amount of USF payments we receive. To the extent that any competitive ETC, such as GCI, has lower costs than us, but receives the same amount of financial support, the competitor gains a competitive cost advantage over us. We cannot say when or how these rules may change.

There has been a trend toward granting ETC status to wireless carriers. Alaska DigiTel LLC, or DigiTel, ACS Wireless, Inc., or ACSW, Dobson, and MTA Wireless have petitioned for ETC status. Further, Dobson has asked the RCA to redefine our rural service areas to permit Dobson to receive support on a wire-center basis, but without having to serve the entire area that we are currently required to serve. Redefining ACS's rural service areas requires the approval of both the RCA and the

FCC. Creating additional service areas may impose a costly regulatory burden on us for which we may not be compensated. On August 28, 2003, the RCA granted DigiTel's request for ETC status. The ACSW, Dobson and Matanuska-Kenai, Inc. d/b/a MTA Wireless petitions are still pending. We cannot predict whether these pending petitions will be granted or when a decision will be rendered. Our ACSW petition will, if granted, generate additional revenue for us. Granting another carrier's petition would provide it with a competitive cost advantage. The granting of Dobson's request to redefine service areas could materially reduce our revenues from USF, in addition to increasing competition.

Revenues from wireless services may be reduced.

Market prices for wireless voice and data services have declined over the last several years and may continue to decline in the future due to increased competition. We cannot assure you that we will be able to maintain or improve our average revenue per user, or ARPU. We expect significant competition among wireless providers, which has been intensified by wireless number portability scheduled for May 2004, to continue to drive service and equipment prices lower, which may lead to increased turnover of customers. If market prices continue to decline it could adversely affect our ability to grow revenue, which would have an adverse effect on our financial condition and results of operation.

We may not be able to offer long distance and Internet services on a profitable basis.

Our long distance operations have historically been modest in relation to the long distance businesses of our competitors and have generated operating losses of $2.0 million in 2001, $1.6 million in 2002 and $21.2 million in 2003. We have expanded our long distance operations substantially and changed the way in which we offer those services by packaging them with complementary services. Our Internet operations generated operating losses of $9.6 million in 2001, $21.6 million in 2002, and $60.5 million in 2003. We have also deployed new technology capable of providing advanced Internet services over a converged network. We have, over the last several years, failed to achieve various plans to increase sales and revenue for these businesses. There is, therefore, no assurance that our operating losses from long distance and Internet services will not increase in the future, even after taking account of any additional revenue from complementary or advanced services.

We expect to continue to enter into resale agreements for a portion of our long distance services. In connection with these agreements, we must estimate future demand for our long distance service. If we overestimate this demand, we may be forced to pay for services we do not need, and if we underestimate this demand, we may need to lease additional capacity on a short-term basis at unfavorable prices, assuming additional capacity is available. If additional capacity is not available, we will not be able to meet this demand. We have recently invested in an advanced network for approximately $20 million. The service we provide over this network currently is not subject to regulation as a telecommunications service. If the FCC or the RCA subject this type of service to increased regulation, it could materially increase our costs and/or reduce our revenues. To date, we have not added sufficient customers to this network to generate enough revenues to operate it profitably and as a result, recorded an impairment charge reducing the carrying value of these assets in the third quarter of 2003. If we are unable to increase our customer base in this network, we may not recover our investment in the network.

We may not be able to profitably take advantage of future fiber-optic capacity.

In anticipation of our obligations under the Telecommunications Services Partnering Agreement, or TPA, we entered with the State of Alaska, we entered an agreement that enables us to purchase additional fiber-optic capacity in future years from Neptune Communications, L.L.C., or Neptune, the expenditures for which are expected to be significant and may exceed $25 million over the next four

years. The subsequent termination of our contract with the State of Alaska has reduced our utilization of the additional fiber-optic capacity purchased from Neptune and may reduce the profitability of the agreement with Neptune.

Certain material terms of the agreement with Neptune remain subject to continued negotiation. As part of the agreement, we made a loan to Neptune Communications in the amount of $15 million. In connection with this loan, Neptune has granted us an option to purchase certain of its network assets no later than January 2, 2006 at a price equal to the then-outstanding loan balance. We are currently negotiating the open elements of our agreement with Neptune, including with respect to the structure and terms of the loans, and renegotiating other terms and conditions of our agreement, and it is impossible to determine the ultimate outcome of these negotiations at this time. We cannot assure you that we will successfully resolve any open issues nor can we assure you of the consequences of our inability to resolve any open issues. In addition, even if we are able to resolve the issues, we cannot assure you that we will generate sufficient revenue from these future acquisitions of fiber-optic capacity to provide satisfactory returns on our investment.

If we do not adapt to technological changes in the telecommunications industry, we could lose customers or market share.

The telecommunications industry will likely continue to experience rapid changes in technology. Our success may depend on our ability to adapt to changes in the industry. Our failure to adopt a new technology, or our choice of one technological innovation over another, may have an adverse impact on our ability to compete or meet the demands of our customers. Technological change could, among other things, reduce the capital required by a competitor to provide local service in our service areas. We cannot predict with precision the pace of technology change and therefore our capital needs. Consequently, our ability to deploy new technologies may be constrained by insufficient capital and/or the need to generate sufficient cash to make quarterly distributions on our IDSs.

New products and services may arise out of technological developments and our inability to keep pace with these developments may reduce the attractiveness of our services. If we fail to adapt successfully to technological changes or obsolescence or fail to obtain access to important new technologies, we could lose customers and be limited in our ability to attract new customers and/or sell new services to our existing customers. The successful delivery of new products and services is uncertain and dependent on many factors, and we may not generate anticipated revenues from such services.

In addition, we cannot predict the extent to which the government will impose new unfunded mandates such as those related to E911, the Communications Assistance for Law Enforcement Act, and Local Number Portability. Each of these government obligations has imposed new requirements for capital that could not have been predicted with any precision. Along with these obligations the FCC has imposed deadlines for compliance with these mandates. We may not be able to provide services that comply with these mandates in time to meet the imposed deadlines or our petitions for extensions of the deadlines may be denied. We cannot predict whether other mandates will occur in the future or the demands they will place on capital expenditures.

Our network capacity and customer service system may not be adequate and may not expand quickly enough to support our anticipated customer growth.

Our financial and operational success depends on assuring that we have adequate network capacity and a sufficient customer support system to accommodate anticipated new customers and the related increase in usage of our network. Our failure to expand and upgrade our networks to meet the increased usage could have a material adverse effect on our business.

The network capacity plan for our wireless services relies on:

•: the availability of wireless telephones of the appropriate model and type to meet the demands and preferences of our customers;
•: the ability to obtain and construct additional cell sites and other infrastructure equipment; and
•: the ability to obtain additional spectrum if required.

Our failure to complete the build-out of our new wireless network, or a delay in the build-out and launch could have an adverse effect on our wireless operations and we may not be able to recover the costs of deploying the new wireless network.

ACS Wireless, Inc. is currently commencing the deployment of a new CDMA 1xRTT network. Substantial costs are involved in the hardware and software necessary to implement this network. Customers may not immediately receive the full benefits of the CDMA 1xRTT network's enhanced capabilities, as we expect network deployment to occur in stages over time. If we are not able to successfully deploy the technology, we may lose customers to other carriers. In addition, there is no assurance that our CDMA 1xRTT network will work as we expect. The size of the Alaska customer base being served by this new network is also small, and we cannot assure you that we will fully recover all costs related to this network within a reasonable period of time, or at all. There is also no assurance that even if the CDMA 1xRTT network is fully built out and performs as expected that it will be or will become the technology preferred by a substantial number of people. Customers may prefer a different type of network and we may lose customers to other carriers with different technology.

Additionally, new billing and customer service arrangements are being implemented by us to service customers on the new CDMA 1xRTT network. The process of migrating existing customers from the existing TDMA network to the new CDMA 1xRTT network involves substantial costs and risks related to the business process changes. During the process of switching billing systems, it is possible that we may experience a disruption in our billing cycle and that customers may be dropped from our database. Any prolonged disruption of our billing function or loss of customers from our database could have an adverse effect on our business, financial condition and results of operations. The changes to our businesses processes have not been proven to work consistently and efficiently, and the failure of these processes could delay or disrupt the deployment of the new CDMA 1xRTT network and have an adverse affect on our business and customer satisfaction.

Wireless number portability may increase the competitiveness of the wireless industry and increase customer turnover.

The wireless industry is extremely competitive and characterized by a high rate of customer turnover. Customer turnover results from different factors, including pricing, service offerings, network coverage and customer service. Efforts to reduce customer turnover and retain customers through various incentives may involve increased costs and reduced pricing.

The competitiveness of the wireless industry may be increased by wireless number portability. The FCC has mandated that wireless carriers provide for wireless number portability for customers changing carriers within the same local market. The FCC requires local number portability for carriers under rules that distinguish between carriers operating in the largest 100 metropolitan statistical areas and those operating outside the top 100 markets. None of the cities in which we provide wireless service is among the top 100 markets. Therefore, under the FCC's rules, we must be capable of allowing number portability by May 24, 2004. Number portability will make it more convenient for customers to change wireless service providers and therefore could cause increased customer turnover, which will increase competition. This increased competition may require us to lower prices or otherwise grant incentives to

help retain current customers or attract new customers, which may reduce revenues, increase our costs and adversely affect our results. In addition, the implementation of number portability will require equipment and network upgrades, which will require additional capital expenditures and may involve service disruptions. We cannot predict the affect of these expenditures on our results.

The successful operation and growth of our businesses are dependent on economic conditions in Alaska.

Substantially all of our customers and operations are located in Alaska. Due to our geographical concentration, the successful operation and growth of our businesses is dependent on economic conditions in Alaska. The Alaskan economy, in turn, is dependent upon many factors, including:

•: the strength of the natural resources industries, particularly oil production;
•: the strength of the Alaskan tourism industry;
•: the level of government and military spending; and
•: the continued growth in services industries.

The customer base for telecommunications services in Alaska is small and geographically concentrated. According to the U.S. Census Bureau estimates, the population of Alaska is approximately 649,000, over 60% of whom live in Anchorage, Fairbanks and Juneau.

There can be no assurance that Alaska's economy will grow or even be stable.

We may not receive substantial amounts of money owed to us in connection with the termination of the agreement with the State of Alaska.

Although we have terminated our TPA with the State of Alaska, substantial accounts receivable related to that agreement remain outstanding. As of December 31, 2003, the State of Alaska owed us approximately $3.6 million for services provided under the terms of the agreement. We cannot assure you we will receive all or any portion of the payment which is due to us. If payment is not received, there could be substantial losses on accounts receivable and/or alternatively, protracted litigation.

We depend on key members of our senior management team.

Our success depends largely on the skills, experience and performance of key members of our senior management team. In connection with our disposition of a controlling interest in our Directories Business in May 2003, our then-president and chief operating officer, Wesley E. Carson, departed to run that business. On October 6, 2003, Charles E. Robinson retired as our chief executive officer. Ms. Liane Pelletier, after having spent 17 years at Sprint Corporation, most recently as a member of its Executive Management Committee and as Chief Integration Officer, has joined us, effective October 6, 2003, as our president and chief executive officer in a position that consolidates the day-to-day responsibilities of Mr. Robinson and Mr. Carson. We cannot assure you that the transition in leadership will be seamless and without disruption to our businesses. Although Ms. Pelletier has extensive telecommunications experience, she has limited history running our company. In addition, Mr. David C. Eisenberg joined us as Senior Vice President, Corporate Strategy and Development on November 3, 2003; Mr. Sheldon Fisher joined us as Senior Vice President, Sales and Product Marketing on February 23, 2004, and Mr. David Wilson joined us as Chief Financial Officer on March 1, 2004. Each of Mr. Wilson, Mr. Eisenberg and Mr. Fisher have experience in the telecommunications industry, but along with Ms. Pelletier, none have experience in the Alaskan telecommunications market and it may be a substantial amount of time before they are familiar with the Alaskan market. There is intense competition for qualified personnel in our industry, and we cannot assure you that we will be able to

attract and retain the personnel necessary for the development of our business. If we lose one or more of our key employees, or the transition in leadership is not successful, our ability to successfully implement our business plan could be materially adversely affected. We do not maintain any "key person" insurance on any of our personnel.

We rely on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure. If these suppliers or vendors experience problems or favor our competitors, we could fail to obtain sufficient quantities of the products and services we require to operate our business successfully.

We depend on a limited number of suppliers and vendors for equipment and services relating to our network infrastructure. If these suppliers experience interruptions or other problems delivering these network components on a timely basis, subscriber growth and our operating results could suffer significantly. Our initial choice of a network infrastructure supplier can, where proprietary technology of the supplier is an integral component of the network, cause us to be effectively locked into one of a few suppliers for key network components. As a result we have become reliant upon a limited number of network equipment manufacturers, including Nortel Networks Corporation. In the event it becomes necessary to seek alternative suppliers and vendors, we may be unable to obtain satisfactory replacement suppliers or vendors on economically attractive terms, on a timely basis, or at all, which could increase costs and may cause disruption in service.

Wireless devices may pose health and safety risk, and driving while using a wireless phone may be prohibited; as a result, we may be subject to new regulations, and demand for our services may decrease.

Media reports have suggested that, and studies have been undertaken to determine whether, certain radio frequency emissions from wireless handsets and cell sites may be linked to various health concerns, including cancer, and may interfere with various electronic medical devices, including hearing aids and pacemakers. In addition, lawsuits have been filed against other participants in the wireless industry alleging various adverse health consequences as a result of wireless phone usage.

If consumers' health concerns over radio frequency emission increase, they may be discouraged from using wireless handsets and regulators may impose restrictions on the location and operation of cell sites. These concerns could have an adverse effect on the wireless communications industry and expose wireless providers to litigation, which, even if not successful, can be costly to defend.

Government authorities might increase regulation of wireless handsets and cell sites as a result of these health concerns and wireless companies might be held liable for costs or damages associated with these concerns. The actual or perceived risk of radio frequency emissions could also adversely affect us through a reduced subscriber growth rate, a reduction in our subscribers, reduced network usage per subscriber or reduced financing available to the wireless communications industry.

In addition, the perceived safety risk associated with the use of a wireless device while driving may also adversely affect our results of operations. Studies have indicated that using wireless devices while driving may impair a driver's attention. The U.S. Congress has proposed legislation that would seek to withhold a portion of federal funds from any state that does not enact legislation prohibiting an individual from using a wireless telephone while driving motor vehicles. In addition, many state and local legislative bodies have passed and proposed legislation to restrict the use of wireless telephones while driving motor vehicles. Concerns over safety risks and the effect of future legislation, if adopted and enforced in the areas we serve, could limit our ability to market and sell our wireless services. In addition, these concerns and this legislation may discourage use of our wireless devices and decrease our revenue from customers who now use their wireless telephones while driving. Further, litigation relating to accidents, deaths or serious bodily injuries allegedly injured as a result of wireless telephone

use while driving could result in damage awards against telecommunications providers, adverse publicity and further governmental regulation. Any or all of these results, if they occur, could have a material adverse effect on our results of operations and financial condition.

We are subject to environmental regulation and environmental compliance expenditures and liabilities.

Our business is subject to many environmental laws and regulations, particularly with respect to owned or leased real property relating to our network equipment and underlying our tower sites. Compliance with these laws and regulations is a factor in our business. We have incurred and expect to continue to incur expenditures to comply with applicable environmental laws and regulations. Moreover, some or all of the environmental laws and regulations to which we are subject could become more stringent or more stringently enforced in the future. Our failure to comply with applicable environmental laws and regulations and permit requirements could result in civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, installation of pollution control equipment or remedial actions.

In addition to operational standards, environmental laws also impose obligations to clean up contaminated properties or to pay for the cost of such remediation. We could become liable, either contractually or by operation of law, for such remediation costs even if the contaminated property is not presently owned or operated by us, or if the contamination was caused by third parties during or prior to our ownership or operation of the property. Moreover, future events, such as changes in existing laws or policies or their enforcement, or the discovery of currently unknown contamination, may give rise to material remediation costs.

A system failure could cause delays or interruptions of service, which could cause us to lose customers.

To be successful, we will need to continue to provide our customers reliable service over our network. Some of the risks to our network and infrastructure include:

•: physical damage to access lines;
•: power surges or outages;
•: software defects; and
•: disruptions beyond our control.

Prolonged service interruptions could affect our business. We rely heavily on our network equipment, telecommunications providers, data and software, to support all of our functions. We rely on our networks and the networks of others for substantially all of our revenues. We are able to deliver services only to the extent that we can protect our network systems against damage from power or telecommunication failures, computer viruses, natural disasters, unauthorized access and other disruptions. While we endeavor to provide for failures in the network by providing back-up systems and procedures, we cannot guarantee that these back-up systems and procedures will operate satisfactorily in an emergency. Should we experience a prolonged failure, it could seriously jeopardize our ability to continue operations. In particular, should a significant service interruption occur, our ongoing customers may choose a different provider, and our reputation may be damaged, reducing our attractiveness to new customers.

We cannot assure you that we will be able to successfully integrate any acquisitions we may make in the future.

We continually explore acquisitions. However, any future acquisitions we make may involve some or all of the following risks:

•: diversion of management attention from operating matters;
•: unanticipated liabilities or contingencies of acquired businesses;
•: failure to achieve projected cost savings or cash flow from acquired businesses;
•: inability to retain key personnel of the acquired business or maintain relationships with its customers;
•: inability to successfully integrate acquired businesses with our existing businesses, including information-technology systems, personnel, products and financial, computer, payroll and other systems of the acquired businesses;
•: difficulties in enhancing our customer support resources to adequately service our existing customers and the customers of the acquired businesses; and
•: difficulty in maintaining uniform standards, controls, procedures, and policies.

In addition, our ability to make acquisitions may be constrained by our inability to use equity as an acquisition currency and by our need to ensure cash for quarterly distributions on our IDSs. Acquisition targets that fail to generate a positive cash flow are probably excluded from consideration under our proposed capital structure. As to targets that do generate positive cash flows, we may not have sufficient available cash or access to sufficient capital resources necessary to complete a transaction for such targets.

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including statements about anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, pricing plans, acquisition and divestiture opportunities, business prospects, strategic alternatives, business strategies, regulatory and competitive outlook, investment and expenditure plans, financing needs and availability and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. Words such as "aims," "anticipates," "believes," "could," "estimates," "expects," "hopes," "intends," "may," "plans," "projects," "seeks," "should," "will" and variations of these words and similar expressions are intended to identify these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Forward-looking statements by us are based on estimates, projections, beliefs and assumptions of management and are not guarantees of future performance. Such forward-looking statements may be contained in this prospectus under "Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Conditions and Results of Operations" and "Business," among other places. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by us as a result of a number of important factors. Examples of these factors include (without limitation):

•: rapid technological developments and changes in the telecommunications industries;
•: our competitive environment;
•: ongoing deregulation (and the resulting likelihood of significantly increased price and product/service competition) in the telecommunications industry as a result of the Telecommunications Act of 1996, or the 1996 Act, and other similar federal and state legislation and the federal and state rules and regulations enacted pursuant to that legislation;
•: changes in revenue from USF;
•: regulatory limitations on our ability to change our pricing for communications services;
•: the possible future unavailability of Statement of Financial Accounting Standards, or SFAS, No. 71, Accounting for the Effects of Certain Types of Regulation, to our wireline subsidiaries;
•: our ability to bundle our products and services;
•: possible changes in the demand for our products and services;
•: changes in general industry and market conditions and growth rates;
•: changes in interest rates or other general national, regional or local economic conditions;
•: governmental and public policy changes;
•: the continued availability of financing in the amounts, at the terms, and subject to the conditions necessary to support our future business;
•: the success of any future acquisitions;
•: changes in accounting policies or practices adopted voluntarily or as required by accounting principles generally accepted in the United States; and
•: the matters described under "Risk Factors."

In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. Additional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this prospectus not to occur. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus. Investors should also be aware that while we do, at various times, communicate with securities analysts, it is against our policy to disclose to them any material non-public information or other confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by an analyst irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

USE OF PROCEEDS

The estimated net proceeds of this offering are expected to be approximately $ million ($ million, if the underwriters exercise the overallotment option in full), assuming an initial public offering price of $ per IDS, based on the midpoint of the price range set forth on the cover of this prospectus for the IDSs, and a public offering price of % of the stated principal amount of $ per separate note, after deducting discounts to the underwriters, fees in connection with our new revolving credit facility, fees and premium associated with the redemption or repurchase of our senior discount debentures and our estimated offering and other expenses.

All the net proceeds of this offering, together with cash on hand, will be used to fund the cash payment to our existing stockholders in connection with the reclassification, to permanently repay all amounts outstanding under our existing credit facility and to fund the redemption or repurchase of our senior discount debentures. For more information, see "Summary—The Transactions."

As of December 31, 2003, the outstanding principal amount under our existing credit facility was $200 million, consisting entirely of term loan borrowings. Term loan borrowings under our existing credit facility bear interest at variable rates with a weighted average interest rate as of December 31, 2003 of 4.50% per year. We used the net proceeds of the borrowings under our existing credit facility to prepay and retire our previous credit facility in August 2003. The senior discount debentures bear cash interest at the rate of 13% per year.

The following table illustrates the estimated sources of and uses for the funds for the Transactions, assuming that the Transactions all occurred as of December 31, 2003 and that the underwriters have not exercised their overallotment option. Actual amounts may differ.

Sources		Amount	Uses	Amount
		(in millions)		(in millions)
Cash on hand		$	Repayment of existing credit facility(1)	$
IDSs and separate notes offered hereby			Redemption or repurchase of senior
			discount debentures(2)
			Cash to existing stockholders(3)
			Purchase of interest rate swap arrangements(4)
			Transaction fees and expenses(5)

	Total sources	$	Total uses	$

(1): Represents the outstanding balance under our existing credit facility as of December 31, 2003, including approximately $ million of accrued interest.
(2): Assumes all $17.3 million principal amount of senior discount debentures outstanding as of December 31, 2003 are redeemed or purchased and includes a redemption premium of $1.1 million and accrued interest to the redemption or purchase date.
(3): Represents $ per share paid to the holders of our existing common stock in connection with the reclassification.
(4): Concurrently with the closing of this offering, we will enter into interest rate swap arrangements with one or more financial institutions. See "Description of Other Indebtedness—Interest Rate Swap Arrangements" for more information.
(5): Includes an estimated $ million of discounts and commission received by the underwriters in connection with this offering, approximately $ million in fees payable to the lenders under our new revolving credit facility and approximately $ million in fees of financial and other advisors.

If the underwriters elect to exercise all or a portion of the overallotment option they have been granted, we will use the net proceeds from the resulting sale of IDSs to undertake a pro rata redemption of a portion of our outstanding shares of Class B common stock issued in the reclassification. See "Description of Capital Stock—Class B Common Stock—Redemption; Exchange" for more information and discussion.

For a further description of the Transactions to be consummated at the time of or following the closing of this offering, see "Summary—The Transactions."

PRICE RANGE OF COMMON STOCK

Our existing common stock, $.01 par value, is listed on the Nasdaq National Market under the symbol "ALSK." On April 8, 2004, the closing sale price for our existing common stock was $4.92. The following table sets forth quarterly high and low sales prices for our existing common stock in 2004 (through April [8], 2004), 2003 and 2002, as reported by the Nasdaq National Market:

2004	High		Low
Second Quarter (through April 8, 2004)	$	5.24	$	4.61
First Quarter	$	5.10	$	4.04
2003
Fourth Quarter	$	5.47	$	3.85
Third Quarter	$	4.63	$	3.13
Second Quarter	$	3.77	$	1.60
First Quarter	$	2.68	$	1.78
2002
Fourth Quarter	$	2.53	$	1.63
Third Quarter	$	4.86	$	1.48
Second Quarter	$	7.60	$	3.71
First Quarter	$	8.28	$	7.30

As of March 15, 2004, there were 29,328,622 shares of our existing common stock issued and outstanding and the approximate number of holders of record of our existing common stock as of March 1, 2004 was 35. Because many of our shares of existing common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

In connection with the Transactions, our existing common stock will be delisted from the Nasdaq National Market.

The market price of the IDSs or the Class A common stock represented thereby will not be correlated to the historical market price of our existing common stock. For more information, see "Risk Factors—Risks Relating to the IDSs, including the Class A Common Stock and Notes Represented by the IDSs, and the Separate Notes—Before this offering, there has not been a public market for our IDSs, the notes or shares of our Class A common stock and there has been a limited market for our existing common stock. The price of the IDSs may fluctuate substantially, which could negatively affect holders of IDSs."

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2003 on an actual basis and on a pro forma as adjusted basis, as if this offering and the other Transactions occurred on that date, assuming the underwriters' have not exercised their overallotment option.

You should read this table in conjunction with the "Use of Proceeds," "Selected Historical Financial Data," "Unaudited Pro Forma Condensed Consolidated Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited consolidated financial statements and the related notes to those statements included elsewhere in this prospectus.

				As of December 31, 2003
				Actual			Pro Forma As Adjusted
				(in thousands)
Cash and cash equivalents				$	97,798		$

Long-term debt (including current portion):
	Existing credit facility			$	200,000		$
	New revolving credit facility(1)				—
	Capital lease obligations and other senior debt				8,860
	9⁷/8% senior notes due 2011				182,000
	Original issue discount — 9⁷/8% senior notes due 2011				(5,856	)
	9³/8% senior subordinated notes due 2009				150,000
	13% senior discount debentures due 2011				17,313
	Original issue discount — 13% senior discount debentures due 2011				(2,097	)
	Notes offered hereby(2)				—

		Total long-term debt			550,220

Class B common stock, $0.01 par value per share, no shares authorized, issued or outstanding, actual; shares authorized, shares issued and outstanding, pro forma as adjusted (3)					—

Stockholders' equity:
	Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued or outstanding, actual and as adjusted				—
	Common stock, $0.01 par value per share, 145,000,000 shares authorized, 33,611,172 shares issued and 29,328,622 shares outstanding, actual; no shares authorized, issued or outstanding, pro forma as adjusted;				336
	Common stock, $0.01 par value, 266,788 shares subject to mandatory redemption				(1,198	)
	Class A common stock, $0.01 par value per share, no shares authorized, issued or outstanding, actual; shares authorized, shares issued and outstanding, pro forma as adjusted (4)				—
	Class C common stock, $0.01 par value per share, no shares authorized, issued or outstanding, actual; shares authorized, no shares issued and outstanding, pro forma as adjusted				—
	Treasury stock, 4,268,450 shares, at cost				(17,118	)
	Paid in capital in excess of par value				278,181
	Accumulated deficit				(253,798	)
	Accumulated other comprehensive loss				(4,543	)

		Total stockholders' equity			1,860

			Total capitalization	$	552,080		$

(1): The new revolving credit facility will provide for borrowings of up to $50 million, which is expected to be undrawn upon completion of the Transactions.
(2): Includes (a) $ million aggregate principal amount of notes offered hereby in the form of IDSs, (b) $ million aggregate principal amount of separate notes offered hereby and (c) $ million aggregate principal amount of notes, in the form of IDSs, to be issued to our existing stockholders in exchange for a portion of their shares of Class B common stock issued in the reclassification on the 12^th day after the date of the completion of the reclassification.
(3): Excludes shares of Class B common stock to be exchanged for IDSs on the 12^th day after the completion of the reclassification. Each remaining share of Class B common stock will be automatically exchanged into one IDS on the second anniversary of the closing of this offering; provided that, at such date, there is not a default or event of default under any of our indebtedness or our subsidiaries' indebtedness. If there is a default under any of our indebtedness or the indebtedness of our subsidiaries on the second anniversary of this offering, the shares of Class B common stock will be automatically exchanged into IDSs at the time such default is cured, waived or otherwise ceases to exist. Accordingly, the portion of the Class B common stock exchangeable into notes may be classified as either long-term debt or mezzanine equity. Currently, we present Class B common stock as mezzanine equity.
(4): Includes (a) shares of Class A common stock offered hereby in the form of IDSs and (b) shares of Class A common stock to be issued in the form of IDSs to our existing stockholders in exchange for a portion of their shares of Class B common stock issued in the reclassification on the 12^th day after the date of the completion of the reclassification.

DILUTION

Dilution is the amount by which the portion of the offering price paid by the purchasers of the IDSs to be sold in the offering that is allocated to our shares of Class A common stock represented by the IDSs exceeds the net tangible book value or deficiency per share of our Class A common stock after the offering. Net tangible book value or deficiency per share of our Class A common stock is determined at any date by subtracting our total liabilities from our total assets less our intangible assets and dividing the difference by the number of shares of Class A common stock deemed to be outstanding at that date. For purposes of this section, references to our "Class A common stock" after the offering includes the shares of Class A common stock to be issued as part of the IDSs in this offering and does not include the new shares of Class A common stock to be issued as part of the IDSs issued upon the exchange into IDSs of a portion of the shares of Class B common stock issued to our existing stockholders in the reclassification on the 12^th day following the completion of the reclassification.

Our net tangible book deficiency as of December 31, 2003 was approximately $77.5 million, or $2.64 per share of Class A common stock. After giving effect to our receipt of approximately $ million of estimated net proceeds (after deducting estimated underwriting discounts and commissions and offering expenses, including $ million paid to holders of our existing common stock in connection with the reclassification) from our sale of IDSs in this offering, our pro forma as adjusted net tangible book deficiency as of December 31, 2003 would have been approximately $ million, or $ per share of Class A common stock. This represents an immediate increase in net tangible book value of $ per share of our Class A common stock to existing stockholders and an immediate dilution of $ per share of our Class A common stock to new investors purchasing IDSs in this offering.

The following table illustrates this substantial and immediate dilution to new investors:

			Per Share of Class A Common Stock
Portion of the initial public offering price of $ per IDS allocated to one share of Class A common stock
	Net tangible book value (deficiency) per share as of December 31, 2003
	Increase per share attributable to cash payments made by investors in this offering

Pro forma as adjusted net tangible book value (deficiency) after this offering and the reclassification

Dilution in net tangible book value per share to new investors

THE RECLASSIFICATION

The following table sets forth, on a pro forma basis as of December 31, 2003, assuming no exercise of the underwriters' overallotment option and the completion of the reclassification of our existing common stock into shares of Class B common stock and cash, and the subsequent exchange of any shares of Class B common stock in excess of 10% of the overall value of our equity capitalization into IDSs on the 12^th day after completion of the reclassification:

•: the total number of shares of our Class A common stock to be owned by the existing stockholders, as represented by the IDSs into which a portion of the shares of Class B common stock issued in the reclassification will be exchanged on the 12^th day after the completion of the reclassification, and to be owned by the new IDS investors, as represented by the IDSs to be sold in this offering;
•: the total number of shares of our Class B common stock owned by the existing stockholders after completion of the reclassification (but excluding shares of Class B common stock exchanged for IDSs on the 12^th day after the completion of the reclassification);
•: the total consideration to be received by the existing stockholders in connection with the reclassification and the total consideration to be received by us from the new IDS investors purchasing IDSs in this offering; and
•: the price per share of Class A common stock to be paid by new investors purchasing IDSs in this offering.

		Shares of Class A Common Stock Reclassified or Purchased
				Shares of Class B Common Stock Received in Connection with the Reclassification		Amount of Total Consideration
						Amount of Total Consideration		Average Price Per Share of Class A Common Stock
		Number	Percent	Number	Percent	(in thousands)		Average Price Per Share of Class A Common Stock
Existing stockholders						(	)	—
New investors
	Total

Subject to certain limitations, all of our outstanding shares of Class B common stock will be automatically exchanged into IDSs on the second anniversary of the closing of this offering.

For more information see "Summary—The Transactions—Reclassification of Our Common Stock."

DIVIDEND POLICY AND RESTRICTIONS

Upon the closing of this offering, our board of directors is expected to adopt a dividend policy pursuant to which, in the event and to the extent we have available cash for distribution to the holders of shares of our Class A common stock as of the , , and of each fiscal year, our board of directors will declare cash dividends on our Class A common stock, subject to applicable law, the terms of the new revolving credit facility, the indenture governing the notes, the indentures governing the ACSH notes and any other then outstanding indebtedness of ours. The initial dividend rate is expected to be equal to $ per share of Class A common stock per year, subject to adjustment. We will pay these dividends quarterly on , , and .

In addition, upon the closing of this offering, our board of directors is expected to adopt a dividend policy pursuant to which, in the event and to the extent we have available cash for distribution to the holders of shares of our Class B common stock as of the , , and of each fiscal year, our board of directors will declare cash dividends on our Class B common stock, subject to applicable law, the terms of the new revolving credit facility, the indenture governing the notes, the indentures governing the ACSH notes, and any other then outstanding indebtedness of ours. The initial dividend rate is expected to be equal to $ per share of Class B common stock per year, subject to adjustment, plus an amount equal to any dividends payable on shares of our Class A common stock. As a result, the initial dividend rate on the Class B common stock is expected to be equal to the weighted average of the quarterly interest rate on the notes plus the quarterly dividend yield on the Class A common stock represented by the IDSs. We will pay these dividends quarterly on , , and .

Dividends will be declared on the Class A common stock and the Class B common stock on a pro rata basis based on their respective dividend rates. We may not declare dividends on our Class A common stock unless at such time the corresponding proportionate dividend is declared on our Class B common stock.

Under Delaware law, our board of directors may declare dividends only to the extent of our "surplus" (which is defined as total assets at fair market value minus total liabilities, minus statutory capital), or if there is no surplus, out of our net profits for the then current and/or immediately preceding fiscal years. As of March 31, 2004, our surplus was approximately $ . We have had net losses in each of the past five fiscal years.

The new revolving credit facility will restrict ACSH from making any distributions to us, if either a default or event of default has occurred and is continuing under the new revolving credit facility or if ACSH does not have at least $10 million undrawn under the new revolving credit facility, after giving pro forma effect to such distribution. See "Description of Certain Indebtedness — New Revolving Credit Facility —Limited Restricted Payments" for a complete description of this restriction on distributions.

The indenture governing the notes will restrict our ability to declare and pay dividends on our Class A common stock and limit our ability to pay dividends on our Class B common stock:

•: if a default under the indenture governing the notes has occurred or is continuing (or would result therefrom);
•: if we could not incur at least $1.00 of additional indebtedness because our debt to EBITDA ratio would be less than to 1 after giving effect to such incurrence; or
•: the aggregate amount of such dividend and all other restricted payments under the indenture governing the notes would exceed an amount based on our EBITDA less interest expense.

See "Description of Notes—Limitation on Restricted Payments" for a complete description of this dividend restriction.

The indentures governing the ACSH notes restrict the ability of ACSH to pay dividends to us if and for so long as it does not meet certain financial covenants or it is in default.

If we have any remaining cash after the payment of dividends as contemplated above, our board of directors will, in its sole discretion, decide to use that cash to fund growth capital expenditures or acquisitions, repay indebtedness, pay additional dividends, if permitted, or for general corporate purposes. Our board of directors may, in its discretion, amend or repeal this dividend policy. Our board of directors may decrease the level of dividends provided for in this dividend policy or discontinue entirely the payment of dividends.

Future dividends with respect to shares of our capital stock, if any, will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions, provisions of applicable law and other factors that our board of directors may deem relevant.

See also "Risk Factors — Risks Relating to the IDSs, Including the Class A Common Stock and Notes Represented by the IDSs and the Separate Notes — You may not receive the level of dividends provided for in the dividend policy our board of directors is expected to adopt upon the closing of this offering or any dividends at all."

We have not paid dividends in the past.

SELECTED HISTORICAL FINANCIAL DATA

The following table sets forth the historical consolidated financial data of the ACS Group at December 31, 2002 and 2003 and for the fiscal years ended December 31, 2001, 2002 and 2003, which are derived from our audited consolidated financial statements and related notes included in this prospectus and at December 31, 1999, 2000 and 2001 and for the fiscal years ended December 31, 1999 and 2000, which are derived from our audited financial statements not included in this prospectus.

The selected historical financial data as of and for the year ended December 31, 1999 represents our consolidated statement of operations and cash flow data from May 15, 1999, the date we completed the acquisition of four local telephone companies in Alaska, through December 31, 1999. Certain reclassifications have been made to the 1999 consolidated operations data to conform to the current presentation of our consolidated operations data.

The selected historical financial data set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes appearing elsewhere in this prospectus.

		Year Ended December 31,
		1999			2000			2001			2002			2003
		(dollars in thousands, except per share amounts)
Operating Data:
Operating revenues		$	192,663		$	311,366		$	328,525		$	340,144		$	323,548
Operating expenses			176,084			277,598			281,402			360,745			360,775
Loss (gain) on disposal of assets			—			—			—			2,163			(112,622	)

Operating income (loss)			16,579			33,768			47,123			(22,764	)		75,395
Other expense, net			(42,052	)		(58,253	)		(56,838	)		(49,501	)		(80,878	)

Loss before income taxes, discontinued operations, extraordinary item and cumulative effect of change in accounting principle			(25,473	)		(24,485	)		(9,715	)		(72,265	)		(5,483	)
Income tax expense (benefit)			(301	)		(197	)		(195	)		—			1,095

Loss from continuing operations			(25,172	)		(24,288	)		(9,520	)		(72,265	)		(6,578	)
Loss from discontinued operations			(306	)		(917	)		(1,718	)		(7,632	)		(52	)
Loss before cumulative effect of change in accounting principle			(25,478	)		(25,205	)		(11,238	)		(79,897	)		(6,630	)
Cumulative effect of change in accounting principle			—			—			—			(105,350	)		—

	Net loss	$	(25,478	)	$	(25,205	)	$	(11,238	)	$	(185,247	)	$	(6,630	)

Loss per share — basic and diluted:
	Loss from continuing operations	$	(1.08	)	$	(0.74	)	$	(0.30	)	$	(2.30	)	$	(0.22	)
	Loss from discontinued operations		(0.01	)		(0.03	)		(0.06	)		(0.24	)		—
	Cumulative effect of change in accounting principle		—			—			—			(3.35	)		—

	Net loss	$	(1.09	)	$	(0.77	)	$	(0.36	)	$	(5.89	)	$	(0.22	)

Weighted average shares outstanding (in thousands):
	Basic		23,396			32,654			31,523			31,464			29,980

	Diluted		23,396			32,654			31,523			31,474			29,980

Balance Sheet Data (end of period)
	Total assets	$	973,909		$	953,660		$	949,095		$	752,509		$	685,391
	Long-term debt including current portion		612,756			614,004			611,250			607,763			550,220
	Stockholders' equity		247,968			215,380			191,687			8			1,860
Other Financial Data:
	Cash provided by operating activities	$	44,033		$	48,493		$	75,263		$	64,827		$	50,249
	Cash provided (used) by investing activities		(774,653	)		(74,699	)		(94,483	)		(78,571	)		106,679
	Cash provided (used) by financing activities		832,614			(13,892	)		(1,664	)		(8,703	)		(77,695	)
	Capital expenditures		74,828			72,253			87,582			71,464			50,744

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial statements have been derived by the application of pro forma adjustments to our historical consolidated financial statements included elsewhere in this prospectus. We are providing the following unaudited pro forma condensed consolidated financial information because the effect of the Transactions on our financial information is material. We are also adjusting the condensed consolidated financial information to give effect to the disposition of our Directories Business in 2003 because that event was significant to our operations and represents the disposition of a business segment.

The unaudited pro forma condensed consolidated balance sheet assumes that each of the following had occurred on December 31, 2003:

•: this offering of IDSs (assuming the underwriters do not exercise their overallotment option) and the separate notes;
•: the reclassification of shares of our existing common stock into shares of our Class B common stock and cash;
•: the automatic exchange of any shares of our Class B common stock in excess of 10% of the overall value of our equity capitalization into IDSs on a pro rata basis on the 12^th day after the completion of the reclassification (assuming the underwriters do not exercise their overallotment option);
•: the repayment and termination of our existing credit facility;
•: the entering into of the new revolving credit facility;
•: the redemption or repurchase of all the senior discount debentures; and
•: the initiation of the interest rate swap arrangements.

The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2003 assumes that each of the following had occurred on January 1, 2003:

•: this offering of IDSs (assuming the underwriters do not exercise their overallotment option) and the separate notes;
•: the reclassification of our existing common stock into shares of our Class B common stock and cash;
•: the automatic exchange of any shares of our Class B common stock in excess of 10% of the overall value of our equity capitalization into IDSs on a pro rata basis on the 12th day after the completion of the reclassification (assuming the underwriters do not exercise their overallotment option);
•: the repayment and termination of our existing credit facility;
•: the entering into of the new revolving credit facility;
•: the redemption or repurchase of all the senior discount debentures;
•: the sale of substantially all of our Directories Business, of which 87.42% was completed on May 8, 2003 and 12.58% was completed on September 4, 2003; and
•: the initiation of the interest rate swap arrangements.

We were engaged in a contract to provide telecommunications services to the State of Alaska which was terminated in October of 2003. The operations and contract termination costs associated

with this customer are not adjusted for in the unaudited pro forma condensed consolidated financial information. Please see Note 2 "Pro Forma Assumptions and Adjustments" for more information.

We anticipate having to pay call premiums of approximately $1.1 million in order to early extinguish our existing $17.3 million of 13% senior discount debentures outstanding as of December 31, 2003. We also anticipate taking a write-off of debt issue costs and original issue discounts associated with the early extinguishment of our $17.3 million of 13% senior discount debentures outstanding as of December 31, 2003 and our $200 million outstanding term loan under the existing senior bank credit facility. Debt issue costs and original issue discounts subject to write-off totaled $8.6 million as of December 31, 2003. These call premiums and write-offs of debt issue costs and original issue discounts which total $9.7 million, are not reflected in the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2003.

The unaudited pro forma condensed consolidated financial information is for informational purposes only and is not necessarily indicative of either the financial position or the results of operations that would have been achieved had the Transactions and the other transactions for which we are giving pro forma effect actually occurred on the dates or for the periods indicated described in the accompanying notes, nor is such unaudited pro forma condensed consolidated financial information necessarily indicative of the results to be expected for the full year or any future period. A number of factors may affect our results. See "Cautionary Notice Regarding Forward-Looking Statements" and "Risk Factors."

The pro forma adjustments are based on preliminary estimates and currently available information and assumptions that management believes are reasonable. The notes to the unaudited pro forma condensed consolidated statements of operations and balance sheet provide a detailed discussion of how such adjustments were derived and presented in the unaudited pro forma condensed consolidated financial information. The unaudited pro forma condensed consolidated financial information should be read in conjunction with "Summary — The Transactions," "Selected Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes appearing elsewhere in this prospectus.

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of December 31, 2003

(in thousands)

Assets				Historical Consolidated			Pro Forma Adjustments			Pro Forma Consolidated
Current assets:
	Cash and cash equivalents			$	97,798		$		(a)(b)(c)(d)(e)(f)	$
	Restricted cash				3,635			—
	Accounts receivable — trade, net of allowance				41,718			—
	Materials and supplies				10,099			—
	Prepayments and other current assets				5,850			—

		Total current assets			159,100
Property, plant and equipment, net					438,144			—
Goodwill					38,403			—
Intangible assets, net					22,055			—
Debt issuance costs, net of amortization					18,939				(c)(d)(e)
Deferred charges and other assets					8,750				(f)

		Total assets		$	685,391		$			$

Liabilities and Stockholders' Equity
Current liabilities:
	Current portion of long-term obligations			$	1,982		$		(d)(e)
	Accounts payable — affiliates				2,215
	Accounts payable, accrued and other current liabilities				50,170				(d)(e)
	Income taxes payable				1,095			—
	Advance billings and customer deposits				8,766			—

		Total current liabilities			64,228
Long-term obligations, net of current portion					548,238				(a)(b)(d)(e)
Other deferred credits and long-term liabilities					71,065			—
Class B common stock									(b)
Stockholders' equity:
	Preferred stock
	Common stock				336				(a)(b)
	Common stock, shares subject to mandatory redemption				(1,198	)
	Class A common stock				—				(a)(b)
	Class C common stock				—
	Treasury stock, 4,268 shares, at cost				(17,118	)
	Paid in capital in excess of par value				278,181				(a)(b)
	Accumulated deficit				(253,798	)			(d)(e)
	Accumulated other comprehensive loss				(4,543	)

		Total stockholders' equity			1,860

			Total liabilities and stockholders' equity	$	685,391		$			$

The notes to this unaudited pro forma condensed consolidated balance sheet are an integral part of the
pro forma financial information presented.

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended December 31, 2003

(in thousands)

			Historical Consolidated			Pro Forma Disposition of Directories Business Adjustments			Subtotal Adjusted for Disposition of Directories Business				Pro Forma Consolidated
Operating revenue:
	Local telephone		$	215,387		$	—		$	215,387			$
	Wireless			46,548			—			46,548
	Directory			11,631			(11,631	)(g)		—		(k)
	Internet			33,026			—			33,026
	Interexchange			16,956			—			16,956

		Total operating revenue		323,548			(11,631	)		311,917
Operating expense:
	Local telephone (exclusive of depreciation and amortization)			116,354						116,354		(h)
	Wireless (exclusive of depreciation and amortization)			31,064						31,064		(h)
	Directory (exclusive of depreciation and amortization)			5,249			(5,249	)(g)		—				—
	Internet (exclusive of depreciation and amortization)			45,523						45,523
	Interexchange (exclusive of depreciation and amortization)			25,542						25,542
	Contract termination and asset impairment charges			54,858						54,858
	Depreciation and amortization			82,185			(2	)(g)		82,183
	Loss (gain) on disposal of assets			(112,622	)		113,518	(g)		896

	Total operating expense			248,153			108,267			356,420
Operating income (loss)				75,395			(119,898	)		(44,503	)
Other income and expense:
	Interest expense			(71,470	)					(71,470	)	(i)(j)
	Interest income and other			(10,191	)		(4,249	)(g)		(14,440	)
	Equity in earnings of investment			783			(783	)(g)		—				—

		Total other expense, net		(80,878	)		(5,032	)		(85,910	)

Loss before income taxes				(5,483	)		(124,930	)		(130,413	)
Income taxes				1,095			(1,095	)(g)		—				—

Loss from continuing operations			$	(6,578	)	$	(123,835	)	$	(130,413	)		$

The notes to this unaudited pro forma condensed consolidated statement of operations are an integral
part of the pro forma financial information presented.

Notes to the Unaudited Pro Forma Condensed
Consolidated Financial Information

(in thousands)

1. BASIS OF PRESENTATION

The unaudited pro forma condensed consolidated balance sheet as of December 31, 2003 presents our consolidated financial position assuming the offering of the IDSs and the separate notes, the reclassification of our existing common stock into shares of our Class B common stock and cash, the automatic exchange of any shares of our Class B common stock in excess of 10% of the overall value of our equity capitalization into IDSs on a pro rata basis on the 12^th day after the completion of the reclassification (assuming the underwriters have not exercised their overallotment option), the entering into of the new revolving credit facility, the repayment and termination of our existing credit facility, the redemption or repurchase of our 13% senior discount debentures due 2011 and the initiation of the interest rate swap arrangements (collectively, the Transactions), had been completed on that date. Our unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2003 presents our consolidated results of operations assuming that the Transactions and the disposition of substantially all of our Directories Business of which 87.42% was completed on May 8, 2003 and 12.58% was completed on September 4, 2003 had all been completed on January 1, 2003. In our opinion, these statements include all material adjustments necessary to reflect, on a pro forma basis, the impact of the Transactions and the sale of the Directories Business on our historical financial information. The pro forma adjustments set forth in the Unaudited Pro Forma Condensed Consolidated Balance Sheet and Unaudited Pro Forma Condensed Consolidated Statement of Operations are described more fully in Note 2, "Pro Forma Assumptions and Adjustments", below.

This unaudited pro forma condensed consolidated financial information should be read in conjunction with, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and the related notes included elsewhere in this prospectus. Our unaudited pro forma condensed consolidated financial information has been presented for informational purposes only and does not necessarily reflect our results of operations or financial position that would have existed had we operated with the Transactions and without our Directories Business for the periods presented and should not be relied upon as being indicative of our future results after the Transactions and the disposition of the Directories Business.

2. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2003

The unaudited pro forma condensed consolidated balance sheet has been prepared to reflect the following transactions as if they had occurred on December 31, 2003. Actual amounts could vary from these pro forma adjustments.

(a): The offering of IDSs and the separate notes.
: We expect to offer for sale IDSs and $ aggregate principal amount of separate notes for gross proceeds of $ and net proceeds of $ , after deducting underwriters' fees and transaction expenses which are currently estimated at $ , which we refer to as the offerings. These IDSs will represent shares of our Class A common stock and $ of notes, bearing interest at %, assuming the underwriters do not exercise their overallotment option for the IDSs.

(b): The reclassification of shares of our existing common stock into shares our Class B common stock and cash.
: We expect to reclassify all of our outstanding shares of existing common stock into the right to receive shares of our Class B common stock and $ of cash, using proceeds from the offering and cash on hand.
: We also expect to automatically exchange any shares of our Class B common stock in excess of 10% of the overall value of our equity capitalization into IDSs on a pro rata basis on the 12^th day following the completion of the reclassification.
: Each share of Class B common stock not otherwise exchanged on the 12^th day after the completion of the reclassification will be automatically exchanged into one IDS on the second anniversary of the closing of this offering; provided that, at such date there is not a default or event of default under any of our indebtedness or our subsidiaries indebtedness. Accordingly, the portion of the Class B common stock exchangeable into senior subordinated debt may be classified as either long-term debt or mezzanine equity. Currently we are presenting this Class B common stock as mezzanine equity.
(c): The entering into of the new revolving credit facility.
: We expect to enter into a new revolving credit facility of $ and to incur debt issuance costs of $ in securing new revolving credit facility, which we intend to pay with proceeds from this offering and cash on hand. The new revolving credit facility is expected to have a term of five years from the date of issuance. The undrawn revolving line of credit, if used, is expected to bear interest at LIBOR plus 3.00%, or an alternative base rate, plus 2.00%. To the extent the revolving line of credit remains undrawn, we expect to incur a commitment fee of 0.50% per year.
(d): The repayment and termination of our existing credit facility.
: We intend to use approximately $200,825 of the expected net proceeds from the offering to repay and retire in full the total outstanding under the existing credit facility of $200,825 including $825 of accrued interest as of December 31, 2003. We also expect to write-off the debt issue costs associated with the early extinguishment of the existing credit facility, which was $6,145 as of December 31, 2003.
(e): The repurchase in full of all outstanding senior discount debentures.
: We intend to use $18,722 of the expected net proceeds from the offering to repay and retire in full the $17,313 outstanding under our senior discount debentures together with $284 of accrued interest as of December 31, 2003 and a call premium of $1,125. We also expect to write-off the debt issue costs and original issue discount associated with the early extinguishments of the existing senior discount debentures, which were $352 and $2,097, respectively, as of December 31, 2003.
(f): The initiation of the interest rate swap arrangements.
: Concurrently with the closing of this offering, we will enter into interest rate swap arrangements with one or more financial institutions. The interest rate swap arrangements will generate fixed payments totaling $ million annually until December 31, 2008, which we intend to use to satisfy a portion of the interest payment obligations on the ACSH notes. We intend to use approximately $ of cash on hand to purchase the interest rate swap arrangements. We believe the interest rate swap arrangements, together with the interest payments on the notes, create the economic equivalent of paying a fixed market rate of interest that we would have obtained had we refinanced the ACSH notes with a new senior secured credit facility with a five-year term although the interest rate swap arrangement will be accounted for as notes receivable under generally accepted accounting principles in the United States. See "Description of Other Indebtedness—Interest Rate Swap Arrangements."

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2003

The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2003 has been prepared to reflect the following adjustments as if the Transactions had occurred on January 1, 2003. Only results from continuing operations are depicted. Actual amounts could vary from these pro forma adjustments.

(g): Represents the effect of eliminating the results of operations of the Directories Business and the $113,518 gain on disposal, $4,249 foreign exchange gains, and alternative minimum income taxes of $1,095 associated with its disposition from the unaudited pro forma condensed consolidated statement of operations. We disposed of 99.9% of the Directories Business during 2003.
(h): Represents the effect of eliminating the Fox Paine management fees and expenses (other than those associated with the Directories Business already included in Note (g)) from the results of operations. Fox Paine will no longer receive such fees and expenses upon the closing of the offering described in Note (a) and the reclassification described in Note (b).
(i): Represents the elimination of historical interest costs associated with debt to be extinguished as a result of the transactions described in Note (d) and Note (e), or extinguished in previous financing transactions completed during 2003.
(j): Represents the addition of the interest costs associated with the new revolving credit facility as discussed in Note (c) and the interest costs associated with the notes forming part of the IDSs and the separate notes as discussed in Note (a) and Note (b).
(k): We expect to record $ of interest income under the effective interest rate method as a result of entering into the interest rate swap arrangements as described in Note (f). Our actual cash received annually under these arrangements is expected to be $ .

The unaudited pro forma condensed consolidated statement of operations has not been adjusted to reflect the following because they are non-recurring:

•: the write-off of debt issue costs associated with the debt to be extinguished early, as described in Note (d) and Note (e), which totaled $6,497 as of December 31, 2003;
•: the write-off of original issue discounts associated with the prepayment of our senior discount debentures as described in Note (e), which totaled $2,097 as of December 31, 2003;
•: the estimated premiums associated with the prepayment of our senior discount debentures as described in Note (e) which we estimate will total $1,125;

•: the operating revenues and expenses for the year ended December 31, 2003 associated with the contract to provide telecommunications services to the State of Alaska, or the State of Alaska contract, which was terminated in October 2003, as follows:

			(in thousands)
State of Alaska contract operating revenues:
	Internet		$	15,537
	Interexchange			4,390

		Total State of Alaska contract operating revenues		19,927

State of Alaska contract operating expenses:
	Internet (exclusive of depreciation and amortization)			20,438
	Interexchange (exclusive of depreciation and amortization)			5,215
	Depreciation and amortization			1,526

		Total State of Alaska contract operating expenses		27,179

State of Alaska net loss from operations			$	(7,252	)

•: the operating and non-operating contract termination and asset impairment charges recorded as a result of the termination of the State of Alaska contract and changes in market conditions, as follows:

			(in thousands)
Operating contract termination and asset impairment charges:
	State of Alaska contract termination charges:		$	12,671
	Asset impairment charges			42,187

		Total operating contract termination and asset impairment charges	$	54,858

Non-operating asset impairment charges			$	15,924

Adjusted for the operations of the State of Alaska contract and the charges associated with contract termination and asset impairments, consolidated operating revenues would have been $291,998 and consolidated operating loss would have been $ for the year ended December 31, 2003, on a pro forma basis.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Introduction

The following discussion should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this prospectus. This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those indicated in forward-looking statements. See "Risk Factors" and "Cautionary Notice Regarding Forward-Looking Statements."

Alaska Communications Systems Group

On May 8, 2003, we completed the sale of a majority interest (87.42%) in our Directories Business. Subsequently, on August 27, 2003, we disposed of substantially all of our remaining interest in the Directories Business. As a result of this transaction, we now own less than 0.1% of the Directories Business. See Note 10 "Gain on Disposal of Assets" to the audited consolidated financial statements included in this prospectus for additional information on this transaction.

During the first quarter of 2003, our lenders approved an amendment and waiver to our old senior credit facility that, among other things, permitted us to sell our Directories Business and required that 75% of proceeds would be used to repay outstanding senior credit facility term loans. This amendment and waiver became effective on May 8, 2003, and on May 13, 2003, we paid down $107 million of its outstanding term loans under our old senior credit facility. On August 26, 2003, we completed the refinancing of our old senior credit facility term loans. We entered into a $250 million new senior credit facility consisting of a term loan facility in an aggregate principal amount of $200 million and an undrawn revolving credit facility of $50 million. We simultaneously issued $182 million aggregate principal amount of 9⁷/8% senior unsecured notes due 2011. From these proceeds, we paid off the remaining $321 million of our old senior credit facility, thereby extinguishing it.

On September 15, 2003, we announced the appointment of Liane Pelletier as CEO and President and the retirement of Charles E. Robinson as CEO. Ms. Pelletier joined our Board of Directors effective October 6, 2003, after spending 17 years at Sprint Corporation, most recently as a member of the Executive Management Committee and as Chief Integration Officer. Ms. Pelletier's position consolidates Mr. Robinson's day-to-day responsibilities and those of Wesley E. Carson, who left in May 2003 to be CEO of the Directories Business. Mr. Robinson, a 45-year telecom industry veteran who founded us in 1999, remained as Chairman of the Board until December 31, 2003 but retired from our day-to-day management on October 6, 2003. Ms. Pelletier replaced Mr. Robinson as Chairman on January 1, 2004. On November 6, 2003, we announced the appointment of David C. Eisenberg to the position of Senior Vice President, Corporate Strategy and Development. Mr. Eisenberg is directly responsible for strategic planning, business development, market and competitive analysis, market research and strategy, regulatory strategy and corporate communications. Mr. Eisenberg comes from Sprint Corporation where he was Vice President — Corporate Strategy and responsible for helping shape that corporation's strategic direction. On January 26, 2004, we announced the appointment of Sheldon Fisher as Senior Vice President of Sales and Product Marketing. Mr. Fisher comes from Sprint Corporation where he was Vice President, Broadband Direct. Mr. Fisher focused on deploying a number of new technologies while at Sprint, and his knowledge will be essential as we deliver innovative new offerings to our customers. On March 1, 2004, we announced the appointment of David Wilson to the position of Chief Financial Officer. In his previous position, Mr. Wilson was Chief Financial Officer of Triumph Communications, a subsidiary of Hughes Electronics.

On November 19, 2003, John M. Egan joined our Board of Directors. Mr. Egan is the recently retired founder and chairman/CEO of ARRIS Group. ARRIS is a global communications technology company specializing in the design and engineering of broadband local access networks and a leading

developer and supplier of optical transmission, cable telephony and Internet access for cable systems operators. On January 9, 2004, Patrick Pichette joined our Board of Directors. Mr. Pichette is Executive Vice-President at Bell Canada. In this capacity, he is responsible for accelerating BCE's migration to the customer service, infrastructure and support systems required to create its new IP-based network.

In December 2001, we entered into a Telecommunications Services Partnering Agreement, or TPA, with the State of Alaska that became effective on April 1, 2002, to provide comprehensive telecommunications services for a period of five years. This contract obligated us, among other things, to deploy and manage advanced and innovative technologies through new and previously untested business practices. The TPA contained a specific completion date of April 1, 2003 for certain implementation aspects, as the well as specific ongoing service level agreements. Both parties to the TPA alleged breaches and failures to perform by the other party, and on September 15, 2003, we received notification from the State of Alaska that the State was terminating the TPA between the two parties and initiating the disentanglement procedures under the contract. On October 1, 2003, we announced that we had entered into a voluntary settlement with the State of Alaska regarding the TPA. Subsequently, we and the State negotiated and agreed to a definitive Settlement Agreement and Mutual Release, or the Settlement Agreement, effective October 14, 2003. As of December 31, 2003, we and the State had completed the majority of the Settlement Agreement disentanglement obligations. All services provided by us under the TPA prior to January 1, 2004 were either transitioned to other service providers at the direction of the State or transitioned to our current commercial rates for such services.

We generate revenue primarily through:

•

the provision of local telephone services, including:

•: basic local service to retail customers within our service areas,
•: wholesale service to CLECs,
•: network access services to interexchange carriers for origination and termination of interstate and intrastate long distance phone calls,
•: enhanced services,
•: ancillary services, such as billing and collection, and
•: universal service payments;

•

the provision of wireless services;

•

the provision of Internet services; and

•

the provision of interexchange network long-distance and data services.

In addition, we provide video entertainment services through our partnership with the satellite operator, DISH Network.

Local Telephone

We are the largest LEC in Alaska and the 13th largest in the United States. Basic local service is generally provided at a flat monthly rate and allows the user to place unlimited calls within a defined local calling area. Access revenues are generated in part by billing interexchange carriers for access to the LEC's local network and its customers and in part by billing the local customers themselves. Universal service revenues are a subsidy paid to rural LECs to support the high cost of providing service in rural markets. Other service revenue is generated from ancillary services and enhanced services.

Changes in revenue are largely attributable to changes in the number of access lines, local service rates and minutes of use. Other factors can also impact revenue, including:

•: intrastate and interstate revenue settlement methodologies,
•: authorized rates of return for regulated services,
•: proportion of access line use by business or consumer subscribers,
•: intrastate and interstate calling patterns,
•: customers' selection of various local rate plan options,
•: selection of enhanced calling services, such as voice mail, and
•: other subscriber usage characteristics.

LECs have three basic tiers of customers:

•: consumer and business customers located in their local service areas that pay for local phone service and a portion of network access,
•: interexchange carriers that pay for access to long distance calling customers located within its local service areas and
•: CLECs that pay for wholesale access to our network in order to provide competitive local service on either a wholesale or UNE basis as prescribed under the 1996 Act.

LECs provide access service to numerous interexchange carriers and may also bill and collect long distance charges from interexchange carrier customers on behalf of the interexchange carriers. The amount of access charge revenue associated with a particular interexchange carrier varies depending upon long distance calling patterns and the relative market share of each long distance carrier.

Our local service rates for end users are authorized by the RCA. Authorized rates are set by the FCC and the RCA for interstate and intrastate access charges, respectively, and may change from time to time.

Wireless

We are one of the largest statewide providers of wireless services in Alaska, currently serving approximately 87,000 subscribers. Our wireless network covers over 480,000 residents, including all major population centers and highway corridors. We operate a TDMA digital network in substantially all of our service areas, and plan to upgrade this network to a new generation of digital network known as CDMA 1xRTT over the course of 2004.

Internet

We are the second largest provider of Internet access services in Alaska with approximately 46,000 customers. We offer dial-up and dedicated DSL Internet access to our customers. We are a single source provider of advanced IP based private networks in Alaska.

Interexchange

We provide switched and dedicated long distance services to approximately 43,000 customers in Alaska. The traffic from these customers is carried over our owned or leased facilities.

Satellite Television

We provide video entertainment services on a resale basis through our partnership with the satellite provider, Dish Network. We entered into this agreement in August 2003.

Critical Accounting Policies and Accounting Estimates

We are responsible for the financial statements presented elsewhere in this prospectus and have evaluated the accounting policies used in their preparation. We believe these policies to be reasonable and appropriate. Our significant accounting policies are described in Note 1 "Description of Company and Summary of Significant Accounting Policies" to the audited consolidated financial statements included in this prospectus. The following discussion identifies those accounting policies that we believe are critical in the preparation of our financial statements, the judgments and uncertainties affecting the application of those policies, and the possibility that materially different amounts would be reported under different conditions or using different assumptions.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Among the significant estimates affecting the financial statements are those related to the realizable value of accounts receivable, long-lived assets, income taxes, network access revenue reserves and litigation reserves. Actual results may differ from those estimates.

Network Access Revenue

Access revenue is recognized when earned. We participate in toll revenue pools with other telephone companies. Such pools are funded by toll revenue and/or access charges regulated by the RCA within the intrastate jurisdiction and the FCC within the interstate jurisdiction. Much of the interstate access revenue is initially recorded based on estimates. These estimates are derived from interim financial statements, available separations studies and the most recent information available about achieved rates of return. These estimates are subject to adjustment in future accounting periods as additional operational information becomes available. To the extent that disputes arise over revenue settlements, our policy is to defer revenue collected until settlement methodologies are resolved and finalized. At December 31, 2003, we had recorded liabilities of $15.2 million related to our estimate of refundable access revenue. Actual results could vary from this estimate.

Income Taxes

We utilize the liability method of accounting for income taxes. Under the liability method, deferred taxes reflect the temporary differences between the financial and tax bases of assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent that it is more likely than not that such deferred tax assets will not be realized. If we thought it was more likely than not that all of our deferred tax assets would be realized in future periods, our previously reported net losses for the three years ended December 31, 2003 would decrease by up to $94.2 million and our accumulated deficit would decrease from $253.8 million to as much as $159.6 million.

We intend to account for our issuance of the IDSs in this offering as representing shares of Class A common stock and notes by allocating the proceeds for each IDS to the underlying Class A common stock or note based upon the relative fair values of each. Accordingly, we will account for the portion of the aggregate IDSs outstanding that represents notes as long-term debt bearing a stated interest rate of % maturing on 2014. We have concluded that it is appropriate and we intend to annually deduct interest expense of approximately $ on the notes from taxable income for U.S.

federal and state income tax purposes. There can be no assurance that the Internal Revenue Service, or the IRS, or the courts will not seek to challenge the treatment of these notes as debt or the amount of interest expense deducted, although to date we have not been notified that the notes should be treated as equity rather than debt for U.S. federal and state income tax purposes. If the notes were required to be treated as equity for income tax purposes, the cumulative interest expense associated with the notes would not be deductible from taxable income and we would be required to recognize additional tax expense and establish a related income tax liability. The additional tax due to the federal and state authorities would be based on our taxable income or loss for each of the years that we take the interest expense deduction and would materially reduce our after-tax cash flow and materially affect our ability to make interest or dividend payments on the IDSs. We do not currently intend to record a liability for a potential disallowance of this interest expense deduction. In addition, non U.S. holders could be subject to withholding taxes on the payment of interest which could subject us to additional liability for the withholding taxes that we do not intend to collect on payments of such interest.

The determination of whether the IDSs constitute investment units where the notes are instruments separate and distinct from the Class A common stock portion of the IDSs and appropriately classified as debt or equity for U.S. federal income tax purposes is based on our facts and circumstances. There is no statutory definition of indebtedness for U.S. federal and state income tax purposes and its characterization is governed by principles developed in case law, which analyzes numerous factors that are intended to identify the economic substance of the investor's interest in us. While the IRS has not published an exhaustive list of relevant items, principal factors often cited include the intent of the parties, whether the instrument in question is an unconditional obligation to pay a sum certain at a maturity date that is not unduly far in the future and whether the instrument has significant equity-like characteristics (for example, convertibility into the stock of the corporation, participation rights, voting power or subordination to other creditors).

Additionally, the IRS may challenge the determination that the fixed interest rate on the notes represents an arm's length rate and, if successful, any excess amount over the arm's length rate could be characterized as a non-deductible payment, or dividend, instead of an interest payment for U.S. federal and state income tax purposes, which could materially increase our taxable income and, thus, our income tax liability.

Our independent advisors have concluded at pricing that the interest rate is within a range an arm's length lender would provide.

Nevertheless, weighing all of the factors and based in part on the foregoing determination from independent financial advisors and advice they have received from outside legal counsel, our U.S. tax counsel believes that the notes, one of the two securities comprising an IDS, should be characterized as debt and the interest paid on the notes should be deductible for U.S. federal income tax purposes. We intend to take this position. However, there can be no assurance that this position would be sustained if challenged by the IRS. See "Risk Factors—Risks Relating to the IDSs, Including the Class A Common Stock and Notes Represented by the IDSs, and the Separate Notes—The U.S. federal income tax consequences of the purchase, ownership and dispositions of IDSs are unclear" and "Material U.S. Federal Income Tax Considerations."

Regulated Accounting

Our local telephone exchange operations account for costs in accordance with the accounting principles for regulated enterprises prescribed by SFAS No. 71, Accounting for the Effects of Certain Types of Regulation. This accounting recognizes the economic effects of rate regulation by recording cost and a return on investment as such amounts are recovered through rates authorized by regulatory authorities. Accordingly, under SFAS No. 71, plant and equipment is depreciated over lives approved by regulators and certain costs and obligations are deferred based upon approvals received from

regulators to permit recovery of such amounts in future years. We implemented, effective January 1, 2003, higher depreciation rates for our regulated telephone plant for the interstate jurisdiction which we believe approximate the economical useful lives of the underlying plant. As a result, we have recorded a regulatory asset under SFAS No. 71 of $17.2 million as of December 31, 2003 related to depreciation of the regulated telephone plant allocable to our intrastate and local jurisdictions. We have also deferred as a regulatory asset $0.9 million of costs incurred in connection with regulatory rate making proceedings, which is being amortized over three years starting in 2003. The balance of this regulatory asset was $0.6 million at December 31, 2003. If we were not following SFAS No. 71, we would have recorded additional depreciation expense of $17.2 million for the intrastate and local jurisdictions and the deferred costs incurred in connection with regulatory rate making proceedings would have been charged to expense as incurred. The Company also has a regulatory liability of $50.5 million at December 31, 2003 related to accumulated removal costs. If the Company were not following SFAS No. 71, it would have followed SFAS No. 143 for asset retirement obligations. Non-regulated revenues and costs incurred by the local telephone exchange operations and our non-regulated operations are not accounted for under SFAS No. 71 principles.

Goodwill and Other Intangible Assets

Effective January 1, 2002, we adopted SFAS No. 142, Goodwill and Other Intangible Assets. In accordance with the guidelines of this accounting principle, goodwill and indefinite-lived intangible assets are no longer amortized but will be assessed for impairment on at least an annual basis. SFAS No. 142 requires that goodwill be tested for impairment at the reporting unit level upon adoption and at least annually thereafter, utilizing a two-step methodology. The initial step requires us to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill, of such unit. If the fair value exceeds the carrying value, no impairment loss would be recognized. However, if the carrying value of the reporting unit exceeds its fair value, the goodwill of the unit may be impaired. The amount, if any, of the impairment is then measured in the second step. We determined the fair value of each reporting unit for purposes of this test primarily by using a discounted cash flow valuation technique. Significant estimates used in the valuation include estimates of future cash flows, both future short-term and long-term growth rates, and estimated cost of capital for purposes of arriving at a discount factor. At December 31, 2003, we had recorded goodwill of $38.4 million applicable to its local telephone and wireless segments.

Litigation Reserves

We are involved in various claims, legal actions and regulatory proceedings arising in the ordinary course of business, and have recorded litigation reserves of $3.9 million as of December 31, 2003 against certain claims and legal actions. We believe that the disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. Estimates involved in developing these litigation reserves could change as these claims, legal actions and regulatory proceedings are resolved.

IDSs and Class B Common Stock

Our IDSs include Class A common stock, senior subordinated notes and three embedded derivative features that may require bifurcation under SFAS No. 133. The embedded derivative features include a call option, a change in control put option, and a term-extending option (two successive five-year renewals) on the senior subordinated debt. Upon the closing of this offering, proceeds from the issuance of the IDSs will be allocated, based upon relative fair value, to Class A common stock and the notes. If it is determined at the time of issue that the embedded derivatives are required to be bifurcated and accounted for separately, a portion of the proceeds from the original issuance will also be allocated to these derivatives equal to the combined fair value of the embedded derivatives that

requires bifurcation. If a portion of the initial proceeds is allocated to any of these derivatives, the notes will initially be recorded at a discount and accreted to their redemption value as a component of interest expense using the effective interest method.

The Class A common stock portion of the IDSs will be included in stockholders' equity, net of related transaction costs, and dividends paid on the Class A common stock will be recorded as a reduction to retained earnings when declared by us. The note portion of the IDS will be included in long-term debt, and the related transaction costs will be capitalized as deferred financing costs and amortized to interest expense using the effective interest method. Interest on the notes will be charged to expense as accrued. The bifurcated derivatives will be recorded as an asset or liability and will be marked-to-market with changes in fair value being recorded in earnings. We intend to determine the fair value of the Class A common stock, the notes and embedded derivatives with the assistance of a third party valuation firm and the sale of the separate notes, which have the same terms as the notes included in the IDSs.

In connection with the recapitalization, we will reclassify each outstanding share of our existing common stock into the right to receive cash and shares of Class B common stock. A portion of the shares of Class B common stock issued to our existing stockholders in the reclassification is subject to pro rata redemption with the net proceeds received by us from any sale of IDSs in connection with the exercise of the underwriters' overallotment option. On the 12^th day after the completion of the reclassification, any shares of Class B common stock that remain outstanding in excess of 10% of the overall value of our equity capitalization will be exchanged for IDSs. The remaining Class B common stock will be automatically exchanged into IDSs on the second anniversary of this offering provided that, at such date, there is not a default or events of default under our indebtedness or the indebtedness of our subsidiaries. The Class B common stock contains dividend features which are intended to replicate the yield on the IDS.

Subject to certain conditions at the second anniversary of the closing of this offering, each share of Class B common stock will automatically be exchanged for one IDS (as may be adjusted for stock splits, dividends, combinations or reclassifications). Accordingly, at the date of initial issuance, based on relative fair values, the relevant portion of the Class B common stock exchangeable into notes will be classified as either debt or mezzanine equity and the relevant portion exchangeable for Class A common stock will be classified as permanent equity. If it is determined at the time of issuance that the embedded exchange feature is required to be bifurcated and separately accounted for, a portion of the value of the Class B common stock at original issuance will also be allocated to this derivative. If a portion of the value of the Class B common stock at original issuance is allocated to the derivative, the amount recorded in debt will initially be recorded at a discount or premium and accreted or amortized to the exchange value using the effective interest method. The bifurcated derivatives will be recorded as assets or liabilities and will be marked to market with changes in fair value being recorded in the statement of operations.

Any dividends paid on the Class B common stock will be deducted in the determination of net income available to Class A common stockholders for determination of earnings per share.

Stock-Based Compensation

We currently have in place stock-based compensation plans including an employee stock option plan, a non-employee director stock compensation plan and an employee stock purchase plan. We expect to terminate all of these stock-based compensation plans upon the completion of the transactions. We also intend to replace the stock-based compensation plans with a long term incentive plan, or LTIP, and have engaged an outside compensation consulting firm to make recommendations to the compensation committee of our board of directors regarding LTIP structures.

Our board of directors is considering various alternatives to fairly compensate our employees for the termination of the existing stock based compensation plans. Any plan adopted by our board of directors is likely to result in compensation expense upon consummation of the Transactions.

Results of Operations

The following table summarizes our operations for the years ended December 31, 2001, 2002, and 2003. Certain reclassifications have been made to 2002 and 2001 to conform to the current presentation of our consolidated operations.

				Year Ended December 31,
				2001			2002			2003
				(in thousands)
Operating revenues:
	Local telephone:
		Local network service		$	96,270		$	99,512		$	96,357
		Network access revenue			102,977			108,335			97,759
		Deregulated revenue and other			22,164			18,600			21,271

	Total local telephone				221,411			226,447			215,387
	Wireless				41,894			43,180			46,548
	Directory				33,870			33,604			11,631
	Internet				13,724			20,847			33,026
	Interexchange				17,626			16,066			16,956

			Total operating revenues		328,525			340,144			323,548
Operating expenses:
	Local telephone				117,820			114,582			116,354
	Wireless				27,429			29,352			31,064
	Directory				14,684			14,170			5,249
	Internet				16,577			31,299			45,523
	Interexchange				25,784			23,647			25,542
	Contract termination and asset impairment charges				—			—			54,858
	Depreciation and amortization				79,108			82,940			82,185
	Loss (gain) on disposal of assets, net				—			2,163			(112,622	)
	Goodwill impairment loss				—			64,755			—

			Total operating expenses		281,402			362,908			248,153

Operating income (loss)					47,123			(22,764	)		75,395
Other income and expense:
	Interest expense				(60,157	)		(51,704	)		(71,470	)
		Interest income and other			3,319			2,203			(9,408	)

			Total other expense, net		(56,838	)		(49,501	)		(80,878	)

Loss before income taxes, discontinued operations and cumulative effect of change in accounting principle					(9,715	)		(72,265	)		(5,483	)
Income tax expense (benefit)					(195	)		—			1,095

Loss from continuing operations					(9,520	)		(72,265	)		(6,578	)
Loss from discontinued operations					(1,718	)		(7,632	)		(52	)

Loss before cumulative effect of change in accounting principle					(11,238	)		(79,897	)		(6,630	)
Cumulative effect of change in accounting principle					—			(105,350	)

Net loss				$	(11,238	)	$	(185,247	)	$	(6,630	)

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Operating Revenues

Operating revenues decreased $16.6 million, or 4.9%, for the year ended December 31, 2003 compared to the year ended December 31, 2002. Wireless, Internet, and interexchange revenues increased compared to the prior period, while local telephone decreased. On May 8, 2003, we completed the sale of a majority interest (87.42%) in our Directories Business. We did not have any revenues from operations from the Directories Business after that date.

Local Telephone. Local telephone revenues, which consist of local network service, network access revenue, and deregulated revenues and other, decreased $11.1 million, or 4.9%, for the year ended December 31, 2003 compared to the same period in 2002.

The local network service component of local telephone revenues was $96.4 million during 2003 compared with $99.5 million during 2002. Local network service revenue decreased $3.2 million or 3.2% from the prior year, while average access lines in service decreased 2.7% to 318,614. Substantially all of the decrease reflects the net effect of retail market share losses offset by increases in unbundled network element revenue. Retail access lines decreased 15,330 or 6.5% to 220,818 at December 31, 2003.

We experienced a loss of direct retail customers during the year as customers cancelled second lines they were not using or switched to competing service providers. This reduction in direct retail customers was partially offset by an increase in wholesale lines. Generally, if a retail local network service customer of ours switches to a competitor, we continue to provide the line to the competitor on a wholesale basis at reduced revenue per line. Management believes that the continuing loss of market share we have experienced in certain of our markets is partially attributable to below cost interconnection rates mandated by the RCA for UNEs. During the first quarter of 2000, we reopened interconnection proceedings for our Anchorage market and during the second quarter of 2001 filed for an interim and refundable UNE rate increase of approximately $10 per month per loop. On October 25, 2001, the RCA granted ACSA an interim UNE rate increase of $1.07, bringing the UNE rate up from $13.85 to $14.92. The interim and refundable rate increase was implemented in November 2001 and generated approximately $0.8 million in additional revenue during 2003. The RCA held a formal hearing on final Anchorage UNE rates during November 2003. We cannot predict when the RCA will issue a final order in this matter or what the outcome will be. See "Regulation" for further discussion.

We believe we are earning less than our authorized rate of return for local network service in several of our markets, and in compliance with APUC orders related to the approval of the acquisition of the four LECs in 1999, filed local service rate cases for all of our LEC businesses with the RCA on July 2, 2001 aimed at making up this deficiency. The RCA's decisions on revenue requirements will have a direct impact on the retail rates and intrastate access rates that we are allowed to charge. A RCA finding of over earnings generally leads to rate reductions while a RCA finding of under earnings generally results in rate increases.

In October 2001, we filed for increased interim and refundable local service rates in our Anchorage market in order to expedite a partial recovery of the total revenue deficiency. On November 15, 2001, the RCA approved an interim and refundable rate increase for ACSA of 24% for certain services. This interim and refundable rate increase was implemented in November 2001 and generated approximately $3.8 million in revenue for the year 2003. The RCA concluded the revenue requirement phase of the hearing for ACSA by finding ACSA to be under earning. By increasing the amount we are considered to under earn, the RCA set the groundwork for increasing the rates we charge so that we earn enough to cover investment requirements to replace old assets. We expect the RCA to continue to hold rate hearings December 2004.

On March 25, 2003, the RCA issued an order approving new revenue requirements for ACSF, ACSAK, and ACSN. The RCA found over earnings by ACSF and ACSN and under earnings by ACSAK. In compliance with RCA orders, ACSF, ACSAK, ACSN have filed cost of service and rate design studies, and supporting testimony, consistent with the RCA revenue requirements orders. On February 20, 2004, the RCA held a hearing to review a stipulated rate settlement. Final rates are expected to be approved during the first half of 2004.

Network access revenues decreased by $10.6 million, or 9.8%, from $108.3 million in 2002 to $97.8 million in 2003. During the second quarter of 2002, we recognized as revenue $11.1 million of previously deferred interstate access revenue related to a dispute on interstate access rates for the Anchorage market based on a favorable ruling by the District of Columbia Court of Appeals. Network access revenue is based on a regulated return on rate base and recovery of allowable expense associated with the origination and termination of toll calls for our retail and resale customers. Excluding the impact of the revenue recognized as a result of the favorable ruling by the court, the increase in network access revenues of $0.5 million compared to the corresponding period in 2002 is due primarily to updated access studies. Management expects that network access revenues will generally be on a declining trend for the foreseeable future.

Deregulated and other revenues, which increased $2.7 million, or 14.4% from 2002, consists principally of billing and collection services, space and power rents, deregulated equipment sales, pay station revenues, regulated directory listing revenue, and other miscellaneous telephone revenues. The increase in deregulated and other revenue was due primarily to an increase in rents and billing and collection revenue.

Wireless. Wireless revenues increased $3.4 million, or 7.8%, to $46.5 million for the year ended December 31, 2003 compared to $43.2 million for the year ended December 31, 2002. This increase is due primarily to growth in average subscribers of 4.2% from 81,170 in 2002 to 84,619 in 2003. Subscriber average minutes of use increased from 202 minutes in 2002 to 227 minutes in 2003. Primarily as a result of increased minutes of use over plan allotments, the monthly average revenue per unit, or ARPU, increased from $44.33 in 2002 to $45.84 in 2003.

Internet. Internet revenues increased from $20.8 million in 2002 to $33.0 million in 2003 — an increase of $12.2 million, or 58.4%. This increase is primarily due to revenue associated with our contract with the State of Alaska and because approximately $1.2 million of this increase was earned in the prior year but could not be estimated and therefore was not recorded until the current year. Internet also experienced growth in DSL subscribers of 41.2% from 12,590 at December 31, 2002 to 17,780 at December 31, 2003.

On September 15, 2003, we received notification from the State of Alaska that it intended to terminate a five year TPA with us and disentangle. Subsequently, we and the State have negotiated and agreed to a definitive Settlement Agreement and Mutual Release effective October 14, 2003, outlining the terms of disentanglement between the parties. We anticipate that revenue for this segment will decrease in future periods as disentanglement occurs under the agreement. State of Alaska contract revenues included in Internet were $15.5 million and $8.0 million for the years ended December 31, 2003 and 2002, respectively.

Interexchange. Interexchange revenue increased from $16.1 million in 2002 to $17.0 million in 2003 — an increase of $0.9 million, or 5.5%. The increase in interexchange revenue is due to an increase in intrastate revenue offset by a decrease in interstate revenue. Long distance subscribers decreased from 70,000 at December 31, 2002 to 43,166 at December 31, 2003. The decrease in subscribers was substantially due to database grooming to remove approximately 20,000 non-revenue generating inactive subscribers from the subscriber list in connection with the conversion of long distance billing from an outside service bureau to an in-house system during the first and second

quarters of 2003. The average revenue per unit, or ARPU, increased to $24.97 in 2003 compared to $19.73 during 2002 and total minutes of use decreased from 153.4 million in 2002 to 149.3 million in 2003. The decline in minutes of use was due to increased competition in the marketplace, and the popularity of discount long distance calling cards. We expect the overall trend of declining minutes to continue. Currently, we have a low penetration on this product, but we expect our market share to grow as we increasingly offer attractive bundles to our customers, which may offset declines in interexchange revenue due to the termination of the State of Alaska contract.

Operating Expenses

Operating expenses decreased $114.8 million, or 31.6%, from $362.9 million for the year ended December 31, 2002 to $248.2 million for the year ended December 31, 2003. Included in operating expenses for 2003 is a net gain on disposal of assets of $112.6 million and contract termination and asset impairment charges of $54.9 million. Included in operating expenses for 2002 is a goodwill impairment charge of $64.8 million and a net loss on disposal of assets of $2.2 million. Excluding these charges, operating expenses increased $9.9 million or 3.4%.

On May 8, 2003, we completed the sale of a majority interest (87.42%) in our Directories Business. We did not have any expenses from operations from the Directories Business after this date.

Depreciation and amortization associated with the operation of each of our segments has been included in total depreciation and amortization.

Local Telephone. The components of local telephone expense are plant specific operations, plant non-specific operations, customer operations, corporate operations and property and other operating tax expense. Local telephone expense increased from $114.6 million for the year ended December 31, 2002 to $116.4 million for the year ended December 31, 2003 — an increase of $1.8 million or 1.5%. The increase in local telephone expense was substantially attributable to executive recruiting and retirement costs, litigation reserves and federal universal service charges recorded during the third and fourth quarters of 2003.

Wireless. Wireless expense increased $1.7 million, or 5.8%, for the year ended December 31, 2003 compared to the year ended December 31, 2002. This increase is substantially due to an increase of minutes of use from 196.8 million in 2002 to 231.0 million in 2003.

Internet. Internet expenses increased by $14.2 million, or 45.4%. The increase in Internet expense was due principally to transition expenses and operating costs associated with providing services under the State of Alaska telecommunications contract. State of Alaska contract related expense totaling $1.5 million was incurred in the previous year but was recorded in the current year as it was the first point in which the expense could be matched to the associated revenue, as discussed above in Internet revenue. We and the State have negotiated and agreed to a definitive Settlement Agreement and Mutual Release effective October 14, 2003, terminating the contract and outlining the terms of disentanglement between the parties. We anticipate expense for this segment to decline as we complete the disentanglement under the contract.

Interexchange. Interexchange expenses increased by $1.9 million, or 8.0%. The majority of this increase was caused by an increase in billing and collection fees, toll switching and litigation reserves in 2003.

Contract termination and asset impairment charges. During the year ended December 31, 2003, we recorded $54.9 million in contract termination and asset impairment charges. These charges resulted from (1) the termination of the TPA with the State of Alaska and (2) an impairment of fiber optic indefeasible rights of use and IP network and service center assets resulting from the termination of the

TPA as well as changes in the communications industry and the economy. The following table itemizes the components of the contract termination and asset impairment charges (in thousands).

Contract termination charges:
	Contract termination payment		$	3,448
	Loss on disposal of assets			5,648
	Accounts receivable and working capital write-downs			3,575

Total contract termination charges				12,671
Asset impairment charges				42,187

		Total contract termination and asset impairment charges	$	54,858

See Note 9 "Contract Termination and Asset Impairment Charges" to the audited consolidated financial statements included elsewhere in this prospectus for a description of each element of the contract termination and asset impairment charges.

Depreciation and Amortization. Depreciation and amortization expense decreased $0.8 million, or 0.9%.

Loss (gain) on Disposal of Assets. On April 28, 2003, we entered into an underwriting agreement to sell a majority interest in our directory business and on April 29, 2003 filed a final prospectus to offer this majority interest to investors through a Canadian income fund. The transaction was completed on May 8, 2003, with us selling an 87.42% interest and retaining a 12.58% interest in our Directories Business. We recognized a gain on disposition of this majority interest of our Directories Business of $97.6 million on a pre-tax basis.

Subsequently on August 27, 2003, we disposed of substantially all of our remaining interest through the exercise of our right to convert 99.23% of our then remaining 12.58% interest to 2.5 million units of the ACS Media Income Fund, which were then sold in an underwritten offering. The transaction settled on September 4, 2003, generating $17.2 million in net proceeds and a gain on disposition of $15.9 million. As a result of this transaction, we now own less than 0.1% of the Directories Business.

We recorded a non-cash loss on the disposal of certain fixed assets of $0.9 million during 2003 and 2.2 million during 2002.

Goodwill impairment loss. We recorded a non-cash goodwill impairment charge during the fourth quarter of 2002 of $64.8 million as a result of our annual goodwill impairment test under SFAS No. 142, Goodwill and Intangible Assets. See Note 4 "Goodwill and Other Intangible Assets" to the audited consolidated financial statements included elsewhere in this prospectus for additional information.

Interest Expense and Interest Income and Other

Interest expense increased $19.8 million, or 38.2%, for the year ended December 31, 2003 compared to the year ended December 31, 2002. As a result of the early extinguishments of outstanding debt of $106.7 million during the second quarter of 2003 and the refinancing of $320.7 million during the third quarter of 2003, $13.1 million of debt issuance cost was charged to interest expense. We also extinguished early our interest rate swap contract during the fourth quarter of 2003, resulting in an additional charge of $5.1 million. During the second quarter of 2002, we reversed $1.7 million of previously accrued interest expense as a result of a favorable ruling by the District of Columbia Court of Appeals related to a dispute on interstate access rates for the Anchorage market. In addition, we incurred additional interest expense in 2003 under our $182 million 9⁷/8% senior unsecured notes due 2011, offset by lower term loan balances and the results of market interest rate effects on our variable interest rate debt. Interest income and other also declined by $11.6 million, due to a

$15.9 million non-operating impairment loss on a note receivable offset by the $4.3 million gain on foreign exchange on the sale of the Directories Business.

Income Taxes

We have fully reserved the income tax benefit resulting from the consolidated losses we have incurred since May 14, 1999 — the date of the acquisition of substantially all of our operations. During 2003, we incurred $1.1 million in Alternative Minimum Tax, as a result of the sale of our Directories Business.

Discontinued Operations

On March 30, 2002, our management approved a plan to offer for sale our wireless cable television service segment. As a result of this decision, the operating revenue and expense of this segment has been classified as discontinued operations under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, for all periods presented and the assets and liabilities of the disposal group have been written down to their fair value, net of expected selling expense. The write down and results of operations of this discontinued segment resulted in a charge to discontinued operations of $52,000 and $7.6 million for the periods ended December 31, 2003 and 2002, respectively. We have fully reserved in the form of a valuation allowance the income tax benefit of this discontinuance. We completed our disposal of our wireless cable television segment as of March 31, 2003.

Cumulative Effect of Change in Accounting Principle

During the second quarter of fiscal 2002, we also completed the transitional review for goodwill impairment required under SFAS No. 142, Goodwill and Intangible Assets. This review indicated that goodwill recorded in the local telephone, Internet and interexchange segments was impaired as of January 1, 2002. Accordingly, we measured and recognized a transitional impairment loss of $105.4 million as a cumulative effect of a change in accounting principle. See Note 4 "Goodwill and Other Intangible Assets" to the audited consolidated financial statements included elsewhere in this prospectus for additional discussion of the impact of this statement on our consolidated financial statements.

Net Loss

Net loss decreased $178.6 million, or 96.4% for the year ended December 31, 2003, compared to the year ended December 31, 2002, as a result of the factors discussed above.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Operating Revenues

Operating revenues increased $11.6 million, or 3.5%, for the year ended December 31, 2002 compared to the year ended December 31, 2001. Local telephone, wireless and Internet revenues increased compared to the prior period.

Local Telephone. Local telephone revenues increased $5.0 million, or 2.3%, for the year ended December 31, 2002 compared to the same period in 2001.

The local network service component of local telephone revenues was $99.5 million during 2002 compared with $96.3 million during 2001. Revenue increased $3.2 million or 3.4% from the prior year, while average access lines in service decreased 1.0% to 327,965. The increase in revenue is due to an increase of approximately $2.1 million in additional feature, service order, directory assistance and wireless access revenue and approximately $1.1 million of additional local private line revenue. The

revenue increase from approximately $4.9 million of rate increases for both retail and UNE local service rates implemented during the fourth quarter of 2001 at ACSA, as discussed below, was offset in part by a promotion to enhance customer loyalty and loss of direct retail lines as customers cancelled second lines they were no longer using and some customers switched to competing service providers. While we receive revenue from competing service providers for providing access to our customers on a wholesale basis, below-cost UNE rates reduces our ability to profit from wholesale.

We believe we are earning less than our required rate of return for local network service in several of its markets and filed local service rate cases for all of our LEC businesses with the RCA on July 2, 2001 aimed at making up this deficiency. Subsequently, in October 2001, we filed for interim and refundable local service rates in our Anchorage market in order to expedite a partial recovery of the total revenue deficiency. On November 15, 2001 the RCA approved an interim and refundable rate increase for ACSA of 24% for certain services. This interim and refundable rate increase was implemented in November 2001 and generated approximately $4.2 million in additional revenue in 2002. We expect the RCA to continue to hold hearings during 2003 and to adjudicate final local service rates during 2003 or 2004.

We continued to experience loss of retail market share for local network service in our Anchorage, Fairbanks and Juneau service areas during the year. Generally, when we lose a retail local network service customer of ours to a competitor, we continue to provide the line to the competitor on a wholesale basis at reduced revenue per line. Management believes that the continuing loss of market share we have experienced in certain of our markets is partially attributable to below cost interconnection rates mandated by the RCA for UNEs. During the second quarter of 2001, we reopened interconnection proceedings for our Anchorage market and filed for an interim and refundable UNE rate increase of approximately $10 per month per loop. On October 25, 2001, the RCA granted ACSA an interim and refundable UNE rate increase of $1.07, increasing the UNE rates from $13.85 to $14.92. The interim and refundable rate increase was implemented in November 2001 and generated approximately $0.7 million in additional revenue during 2002. The RCA held a formal hearing on final Anchorage UNE rates during November 2003. We cannot predict when the RCA will issue a final order in this matter or what the outcome will be. See "Regulation" for further discussion.

Network access revenues increased by $5.4 million, or 5.2%, from $103.0 million in 2001 to $108.3 million in 2002. During the second quarter of 2002, we recognized as revenue $11.1 million of previously deferred interstate access revenue related to a dispute on interstate access rates for the Anchorage market based on a favorable ruling by the District of Columbia Court of Appeals. Excluding the impact of the revenue recognized as a result of the favorable ruling by the court, the decrease in network access revenue compared to the corresponding period in 2001 is due primarily to a shift from retail and wholesale lines to UNEs. Management expects that network access revenue will decline as a component of local telephone revenue for the foreseeable future.

Deregulated and other revenues declined $3.6 million, or 16.1% from 2001. The decline in deregulated and other revenue was due primarily to a decrease in deregulated equipment sales of approximately $3.0 million. Customer premise equipment sales tend to fluctuate significantly from quarter to quarter and management believes they have also been impacted by recent economic concerns in the marketplace and technology alternatives.

Wireless. Wireless revenues increased $1.3 million, or 3.1%, to $43.2 million for the year ended December 31, 2002 compared to $41.9 million for the year ended December 31, 2001. This increase is due primarily to growth in average subscribers of 4.0% from 78,027 in 2001 to 81,170 in 2002. Average revenue per unit, or ARPU, decreased slightly from $44.74 in 2001 to $44.33 in 2002.

Directory. Directories Business revenues decreased slightly to $33.6 million in 2002 from $33.9 million in 2001.

Internet. Internet revenues increased from $13.7 million in 2001 to $20.8 million in 2002 — an increase of $7.1 million, or 51.9%. This increase is primarily due to revenue associated with our contract with the State of Alaska and growth in DSL subscribers of 78.8% from 7,041 in 2001 to 12,590 in 2002. Also contributing to the increase was the additional revenues resulting from the acquisition of MosquitoNet in July of 2001.

On December 10, 2001, we entered into a five-year contract with the State of Alaska to provide a broad range of telecommunications services, many of which were to be provided over an IP network and supported by a service center owned and operated by ACSI. Services under this contract began to be implemented during the second quarter of 2002. We made substantial capital investments to support the telecommunications needs of this customer, totaling approximately $12.4 million through December 31, 2002.

Interexchange. Interexchange revenue decreased from $17.6 million in 2001 to $16.1 million in 2002 — a decrease of $1.6 million, or 8.9%. The decrease was due to a decline in long distance minutes of use from 219.6 million in 2001 to 153.4 million in 2002. Long distance subscribers increased from approximately 65,700 at December 31, 2001 to approximately 70,000 at December 31, 2002. During the first and second quarters of 2003, approximately 20,000 non-revenue generating inactive subscribers were removed from the subscriber lists due to database grooming. The decline in minutes of use was due to our decision to modify and cap a previously unlimited $20 per month interstate calling plan in May of 2001, increased competition in the marketplace, and the popularity of discount long distance calling cards.

Operating Expenses

Operating expenses increased $81.5 million, or 29.0%, from $281.4 million for the year ended December 31, 2001 to $362.9 million for the year ended December 31, 2002.

Local Telephone. Local telephone expense decreased from $117.8 million for the year ended December 31, 2001 to $114.6 million for the year ended December 31, 2002 — a decrease of $3.2 million or 2.7%. As a percentage of local telephone revenue, local telephone expense decreased from 53.2% for 2001 to 50.6% for 2002. These results reflect continued improvements in our cost structure, including workforce reductions and benefits derived from the deployment of information systems.

Wireless. Wireless expense increased $1.9 million, or 7.0%, for the year ended December 31, 2002 compared to the year ended December 31, 2001. This increase is substantially due to an increase of minutes of use from 162.0 million in 2001 to 196.8 million in 2002.

Directory. Directory expense decreased $0.5 million from $14.7 million in 2001 to $14.2 million in 2002. The decline in expenses is due to a decrease in cost of goods sold in 2002.

Internet. Internet expenses increased by $14.7 million, or 88.8%. The increase in Internet expense was due principally to start-up expenses associated with commencing services under the State of Alaska telecommunications contract, which we entered into on December 10, 2001.

Interexchange. Interexchange expenses decreased by $2.1 million, or 8.3%. The majority of this decrease was the result of the decline in long distance minutes of use as discussed under interexchange service revenue.

Depreciation and Amortization. Depreciation and amortization expense increased $3.8 million, or 4.8%, due principally to increases in plant in service in 2002 and the adoption of shorter depreciable lives for certain classes of assets over the corresponding period of 2001, offset by ceasing goodwill amortization with the adoption of SFAS No. 142, Goodwill and Intangible Assets on January 1, 2002. Depreciation and amortization expense in 2001 included $7.7 million of goodwill amortization. Under SFAS No. 142, goodwill is no longer amortized but is instead subjected to an annual impairment test.

Loss on disposal of assets. We recorded a non-cash loss on disposal of assets of $2.2 million during 2002 as a result of retiring certain assets no longer in use which were not fully depreciated at their retirement date.

Goodwill impairment loss. We recorded a non-cash goodwill impairment charge during the fourth quarter of 2002 of $64.8 million as a result of our annual goodwill impairment test under SFAS No. 142, Goodwill and Intangible Assets. See Note 4 "Goodwill and Other Intangible Assets" in the Notes to Consolidated Financial Statements included elsewhere in this prospectus for additional information.

Interest Expense and Interest Income and other

Interest expense decreased $8.5 million, or 14.1%, for the year ended December 31, 2002 compared to the year ended December 31, 2001, principally as a result of market effects on our variable interest rate debt. In addition, during the second quarter of 2002, we reversed previously accrued interest expense of $1.7 million as a result of a favorable ruling by the District of Columbia Court of Appeals related to a dispute on interstate access rates for the Anchorage market. Interest income and other also declined by $1.1 million, or 33.6%, as a result of a lower average invested cash balance and lower market interest rates during 2002 compared to 2001.

Income Taxes

ACS Group has fully reserved the income tax benefit resulting from the consolidated losses we have incurred since May 14, 1999, the date of the acquisition of substantially all of our operations. During 2003, we incurred $1.1 million in Alternative Minimum Tax as a result of the sale of our Directories Business.

Discontinued Operations

On March 30, 2002, our management approved a plan to offer for sale its wireless cable television service segment. As a result of this decision, the operating revenue and expense of this segment has been classified as discontinued operations under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, for all periods presented and the assets and liabilities of the disposal group have been written down to their fair value, net of expected selling expense. The write down and results of operations of this discontinued segment resulted in a charge to discontinued operations of $7.6 million and $1.7 million for our periods ended December 31, 2002 and 2001, respectively. We have fully reserved in the form of a valuation allowance the income tax benefit of this discontinuance.

Cumulative Effect of Change in Accounting Principle

Net Loss

Net loss increased $174.0 million for the year ended December 31, 2002 compared to the year ended December 31, 2001 as a result of the factors discussed above.

Liquidity and Capital Resources

ACS Group has satisfied its cash requirements for operations, capital expenditures and debt service primarily through internally generated funds, the sale of stock and debt financing. For the year ended December 31, 2003 our cash flows from operating activities were $50.2 million. At December 31,

2003, we had approximately $94.9 million in net working capital, with approximately $97.8 million represented by cash and cash equivalents and $3.6 million by restricted cash. As of December 31, 2003 we had $50.0 million of remaining capacity under our revolving credit facility, representing 100% of available capacity.

We have outstanding a $200.0 million bank credit agreement (the "existing credit facility"), $150.0 million in 9³/8% senior subordinated notes due 2009, $182.0 million in 9⁷/8% senior unsecured notes due 2011 and $17.3 million in 13% senior discount debentures due 2011, representing substantially all of our long-term debt of $550.2 million as of December 31, 2003. Interest on our senior subordinated notes, senior unsecured notes and senior discount debentures is payable semiannually. Interest on borrowings under our existing credit facility is payable monthly, bi-monthly, quarterly or semi-annually at our option. Our existing credit facility requires $500,000 quarterly principal payments that commence on March 31, 2004, with the balance due in 2010. Our existing credit facility contains a number of restrictive covenants and events of default, including covenants limiting capital expenditures, incurrence of debt, and the payment of dividends, and requires us to achieve certain financial ratios. We are in compliance with all of our debt covenants.

On July 15, 2002 we fulfilled a commitment to Neptune to provide a loan for the aggregate principal amount of $15 million in return for certain consideration. We have an agreement that enables us to purchase additional fiber optic capacity in future years from Neptune, the expenditures for which are expected to be significant and may exceed $25 million over the next four years. While we have an agreement with Neptune, certain material terms of the agreement remain subject to continued renegotiation. The significant provisions of this agreement are: (i) purchase commitments by us for capacity in 2005 and 2007, the final price and quantity of which are subject to future events, (ii) Neptune's restoration of our traffic carried on another cable system and (iii) specific interconnection arrangements between us and Neptune, should we exercise our option to purchase certain network assets from Neptune. We are currently negotiating open elements of its agreement with Neptune and renegotiating other terms and conditions of the agreement. It is impossible to determine the ultimate outcome of these negotiations at this time. The loan was written down to zero, its estimated fair value, during the quarter ended September 30, 2003 as described in Note 11 "Non-operating Charges" to the audited consolidated financial statements included in this prospectus.

The following summarizes our contractual obligations and commitments with quantifiable payment terms as of December 31, 2003:

	Total		2004		2005-2006		2007-2008		Thereafter
Long-term debt	$	542,360	$	1,361	$	2,574	$	2,331	$	536,094
Capital leases		7,860		621		1,462		1,517		4,260
Operating leases		7,420		1,939		3,009		1,722		750
Unconditional purchase obligations		4,774		2,015		2,609		150		—

Total contractual cash obligations	$	562,414	$	5,936	$	9,654	$	5,720	$	541,104

We also have obligations for material cash interest payments on our long-term debt that are not included in the table above. Approximately 36% of our debt at December 31, 2003 is variable. See "Quantitative and Qualitative Disclosure about Market Risk" for more information.

The local telephone network requires the timely maintenance of plant and infrastructure. Our historical capital expenditures have been significant. The construction and geographic expansion of our wireless network has required significant capital. The implementation of our interexchange network and data services strategy is also capital intensive. Capital expenditures for 2002 were $71.5 million, including $4.2 million in capital leases, approximately $12.4 million necessary to meet our obligations under a contract with the State of Alaska and approximately $6.2 million for the first phases of our build out of a network based on our PCS licenses. Capital expenditures for 2003 were $50.7 million, of which $11.5 million was expended on our CDMA build out and $3.5 million was expended on the TPA. We anticipate capital spending of between $50 million and $55 million for 2004. We intend to fund our

future capital expenditures with cash on hand, through internally generated cash flows, and if necessary, through borrowings under the revolving credit facility.

On May 8, 2003 we completed the sale of a majority interest in the Directories Business for net proceeds of $110.4 million, after deducting its underwriters' fees and transaction expenses of $10.2 million. The Fund's net proceeds were used to acquire from us an 87.42% interest in the Directories Business. We received net proceeds of $105.1 million after deducting our fees and expenses associated with the transaction of $5.3 million.

We entered into an arrangement with the Metropolitan Life Insurance Company (MetLife) to provide a credit facility to our Directories Business on May 8, 2003 immediately prior to the sale of our Directories Business to the Fund. The Directories Business then drew $35.0 million of term loans against the facility, using $1.5 million to pay fees and expenses related to the debt issuance and $0.1 million to prepay an annual agency fee to MetLife. Of the $33.4 million in net cash proceeds, $0.4 million was deposited into the Directories Business as cash working capital and $33.0 million was distributed to us as a dividend. The credit facility is non-recourse to us.

Subsequently, on August 27, 2003, we disposed of substantially all of our remaining interest in the Directories Business through the exercise of our right to convert 99.23% of our then remaining 12.58% interest in the Directories Business to 2.5 million units of the Fund, which were then sold in an underwritten offering. The transaction settled on September 4, 2003, generating $17.1 million in net proceeds.

During the first quarter of 2003, our lenders approved an amendment and waiver to our then existing credit facility that, among other things, permitted us to sell our Directories Business and required that in the event the sale was completed, 75% of proceeds would be used to repay outstanding our then existing credit facility term loans. This amendment and waiver became effective on May 8, 2003, and on May 13, 2003, we paid down $106.7 million of our outstanding existing credit facility term loans.

On August 26, 2003, we completed the refinancing of our then existing credit facility term loans. We entered into a new $250.0 million credit facility consisting of a term loan facility in an aggregate principal amount of $200.0 million and an undrawn revolving credit facility in an aggregate principal amount of $50.0 million. We simultaneously issued $182.0 million aggregate principal amount of 9⁷/8% senior unsecured notes due 2011 at an issue price of approximately 96.7% for net proceeds of $176.0 million. From these proceeds, we paid off $320.7 million of our then existing credit facility.

Our existing credit facility and our senior discount debentures will be repaid from proceeds of this offering. Concurrently with the closing of this offering, we will enter into a new senior revolving credit facility. We have received commitments from financial institutions affiliated with each of the underwriters to provide a $50.0 million senior secured credit facility available to us on a revolving basis for five years. We expect that the new revolving credit facility will have several provisions similar to our existing credit facility.

Our capital requirements may change due to, among other things: impacts of regulatory decisions that affect our ability to recover its investments, changes in technology, the effects of competition, changes in our business strategy, and our decision to pursue specific acquisition opportunities.

We believe that we will have sufficient working capital provided by operations and available borrowing capacity under our new revolving credit facility to service our debt and fund our operations, capital expenditures and other obligations over the next 12 months. Our ability to service our debt and fund our operations, capital expenditures and other obligations will be dependent upon our future financial performance, which is, in turn, subject to future economic conditions and to financial, business, regulatory and other factors, many of which are beyond our control.

Effect of New Accounting Standards

On August 15, 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. SFAS No. 143 addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This standard generally applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset. Under the new accounting method, asset retirement obligations are recognized in the period in which they are incurred if a reasonable estimate of fair value can be made. When the liability is initially recorded, the cost is capitalized and increases the carrying value of the related long-lived asset. The liability is then accreted to its present value each period and the capitalized cost is depreciated over the estimated useful life of the related asset. At the settlement date, the obligation is settled for its recorded amount or a gain or loss is recognized upon settlement.

In accordance with federal and state regulations, depreciation expense for our local exchange carriers regulated operations have historically included an additional provision for cost of removal. Under SFAS No. 143, the additional cost of removal provision would no longer be included in depreciation expense, because it does not meet the recognition and measurement principles of an asset retirement obligation. On December 20, 2002, the FCC notified local exchange carriers that they should not adopt the provisions of SFAS No. 143 unless specifically required by the FCC in the future. As a result of the FCC ruling, we will continue to record depreciation expense for cost of removal for its local exchange carrier subsidiaries that follow SFAS No. 71. Prior to SFAS 143, asset removal costs that qualified and did not qualify for asset retirement obligations were recorded in Accumulated depreciation. The accumulated asset retirement removal costs for 2003 were reclassified as regulatory liabilities in accordance with SFAS No. 143 and SFAS No. 71. Accumulated retirement removal costs in Other deferred credits and long-term liabilities not qualifying for asset retirement obligations were $50.5 million at December 31, 2003. For 2002, $50.9 million in asset retirement costs have been reclassified from Accumulated depreciation to accumulated retirement removal costs in Other deferred credits and long-term liabilities.

We applied the provisions of SFAS No. 143 to our nonregulated subsidiaries effective January 1, 2003. Our wireless segment has entered into cell site operating leases, which are subject to the provisions of this statement. Cell site lease agreements may contain clauses requiring restoration of the leased site at the end of the lease term, creating an asset retirement obligation. Landlords may choose not to exercise these rights as cell sites are considered useful improvements. Our initial adoption of this statement did not have a material impact on our results of operations, financial position or cash flows.

In June 2002, FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 requires that companies recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. Our adoption of this statement did not have a material impact on its financial position, results of operations, or cash flows.

On December 31, 2002, FASB issued SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. We do not currently have plans to change to the fair value method of accounting for our stock based compensation. The disclosure requirements are now effective.

On April 30, 2003, FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. The statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. This statement is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. Our adoption of this statement did not have a material impact on its financial position, results of operations, or cash flows.

On May 15, 2003, FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. The new statement requires that certain financial instruments that, under previous guidance, issuers could account for as equity, be classified as liabilities in statements of financial position. Most of the guidance in SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 had no effect on our financial position, results of operations or cash flows. Subsequently, we entered into an agreement in September 2003 with a retiring officer to reacquire 267 shares of our stock owned by the officer in January 2004. As a result we have classified those shares as shares subject to mandatory redemption within stockholders equity, as described in Note 18 "Related Party Transactions" to the audited consolidated financial statements included in this prospectus.

In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The recognition and measurement provisions are effective on a prospective basis to guarantees issued or modified after December 31, 2002. The adoption of FIN 45 had no effect on our financial position, results of operations or cash flows.

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities (revised in December 2003). FIN 46 addresses when a company should include in its financial statements the assets, liabilities and activities of a variable interest entity. FIN 46 defines variable interest entities as those entities with a business purpose that either do not have any equity investors with voting rights, or have equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46 also requires disclosures about variable interest entities that a company is not required to consolidate, but in which it has a significant variable interest. FIN 46 consolidation requirements are effective for all variable interest entities created after January 31, 2003, and to pre-existing entities in the first fiscal year or interim period ending after December 15, 2003. Certain disclosure requirements are effective for financial statements issued after January 31, 2003. The adoption of FIN 46 has no effect on our financial position, results of operations or cash flows.

Outlook

We expect that, overall, the demand for telecommunications services in Alaska will grow, particularly as a result of:

•: increasing demand for private network services by government and business on a statewide basis on either a circuit switched or IP basis,
•: increasing demand for wireless voice and data services, and
•: growth in demand for DSL and Internet access services due to higher business and consumer bandwidth needs.

We believe that we will be able to capitalize on this demand through our diverse service offerings on our owned circuit switched and IP facilities and new sales and marketing initiatives directed toward basic voice, enhanced and data services.

There are currently a number of regulatory proceedings underway at the state and federal levels that could have a significant impact on our operations. We cannot predict with certainty the impact of current or future regulatory developments on any of our businesses.

The telecommunications industry is extremely competitive, and we expect competition to intensify in the future. As an ILEC, we face competition mainly from resellers, local providers who lease our UNEs and, to a lesser degree, from facilities-based providers of local telephone services. Moreover, while wireless telephone services have historically complemented traditional LEC services, we anticipate that existing and emerging wireless technologies may increasingly compete with LEC services. Similarly, local and interexchange service competition may come from cable television providers and voice over IP providers. In wireless services, we currently compete with at least one other wireless provider in each of our wireless service areas. In the highly competitive business for Internet access services, we currently compete with a number of established online service companies, interexchange carriers and cable companies. In the interexchange market, we believe we currently have less than 5% of total revenue in Alaska and face competition from the two major interexchange providers.

The telecommunications industry is subject to continuous technological change. We expect that new technological developments in the future will generally serve to enhance our ability to provide service to our customers. However, these developments may also increase competition or require us to make significant capital investments to maintain our leadership position in Alaska.

Impact of Inflation

The effect of inflation on ACS Group's financial results has not been significant in the periods presented.

Quantitative and Qualitative Disclosures About Market Risk

We have issued senior subordinated notes, senior unsecured notes, senior discount debentures and have entered into a bank credit facility. These on-balance sheet financial instruments, to the extent they provide for variable rates of interest, expose us to interest rate risk, with the primary interest rate risk exposure resulting from changes in LIBOR or the prime rate, which are used to determine the interest rates that are applicable to borrowings under our bank credit facility.

We used derivative financial instruments, specifically an interest rate swap agreement, to partially hedge variable interest transactions. We ended our interest rate swap agreement in November 2003. Our derivative financial instrument transaction was entered into for hedging purposes only. The terms and characteristics of the derivative financial instruments were matched with the underlying on-balance sheet instrument and did not constitute speculative or leveraged positions independent of these exposures.

The table below provides information about our sensitivity to market risk associated with fluctuations in interest rates as of December 31, 2003. To the extent that our financial instruments expose us to interest rate risk, they are presented within each market risk category in the table below. The table presents principal cash flows and related expected interest rates by year of maturity for our bank credit facilities, senior subordinated notes, senior unsecured notes, senior discount debentures, and capital leases and other long-term obligations outstanding at December 31, 2003. Weighted average variable rates for the bank credit facilities are based on implied forward rates in the LIBOR yield curve as of December 31, 2003. Fair values included herein have been determined based on (i) the carrying value for the bank credit facility at December 31, 2003, as interest rates are reset periodically; (ii) quoted market prices for senior subordinated notes; (iii) quoted market prices for senior subordinated notes; and (iv) by discounting expected cash flows to their present value for the senior discount debentures using our estimated current borrowing cost for subordinated debt. Our

consolidated financial statements contain descriptions of the credit facility, senior subordinated notes, senior unsecured notes, senior discount debentures and capital leases and other long-term obligations and should be read in conjunction with the table below.

		2004			2005			2006			2007			2008			Thereafter			Total			Value
*Interest Bearing Liabilities:*
Bank credit facility		$	2,000		$	2,000		$	2,000		$	2,000		$	2,000		$	190,000		$	200,000		$	200,000
	Weighted average interest rate (variable)		4.78	%		6.22	%		7.32	%		7.99	%		8.52	%		8.82	%		8.73	%
Senior subordinated notes		$	—		$	—		$	—		$	—		$	—		$	150,000		$	150,000		$	150,000
	Average interest rate (fixed)		9.38	%		9.38	%		9.38	%		9.38	%		9.38	%		9.38	%		9.38	%
Senior unsecured notes		$	—		$	—		$	—		$	—		$	—		$	182,000		$	182,000		$	191,100
	Average interest rate (fixed)		9.88	%		9.88	%		9.88	%		9.88	%		9.88	%		9.88	%		9.88	%
Senior discount debentures		$	—		$	—		$	—		$	—		$	—		$	17,313		$	17,313		$	20,870
	Average interest rate (fixed)		13.00	%		13.00	%		13.00	%		13.00	%		13.00	%		13.00	%		13.00	%
Capital leases and other long-term		$	802		$	884		$	967		$	1,024		$	923		$	4,260		$	8,860		$	8,860
	Average interest rate (fixed)		9.73	%		9.78	%		9.84	%		9.93	%		10.09	%		10.66	%		10.25	%

The table below provides information about our sensitivity to market risk associated with fluctuations in interest rates as of December 31, 2002. To the extent that our financial instruments expose us to interest rate risk, they are presented within each market risk category in the table below. The table presents principal cash flows and related expected interest rates by year of maturity for our bank credit facilities, senior subordinated notes, senior discount debentures, and capital leases and other long-term obligations outstanding at December 31, 2002. Weighted average variable rates for the bank credit facilities are based on implied forward rates in the LIBOR yield curve as of December 31, 2002. For the interest rate swap agreement, the table presents the notional amount and the related reference interest rates by year of maturity. Fair values included herein have been determined based on (i) the carrying value for the bank credit facility at December 31, 2002, as interest rates are reset periodically; (ii) quoted market prices for senior subordinated notes; (iii) by discounting expected cash flows to their present value for the senior discount debentures using our estimated current borrowing cost for subordinated debt; and (iv) quoted prices from a financial institution for our swap agreement. Our consolidated financial statements contain descriptions of the bank credit facilities, senior subordinated notes, senior discount debentures, and capital leases and other long-term obligations and the interest rate swap agreement and should be read in conjunction with the table below.

			2003			2004			2005			2006			2007			Thereafter			Total			Fair Value
			(dollars in thousands)
*Interest Bearing Liabilities:*
Bank credit facility — tranche A			$	1,500		$	1,500		$	1,500		$	144,000		$	—		$	—		$	148,500		$	148,500
	Weighted average interest rate (variable)			3.62	%		4.40	%		5.53	%		6.25	%		—			—			4.95	%
Bank credit facility — tranche B			$	1,500		$	1,500		$	1,500		$	1,500		$	142,500		$	—		$	148,500		$	148,500
	Weighted average interest rate (variable)			4.37	%		5.15	%		6.28	%		7.03	%		7.52	%		—			6.07	%
Bank credit facility — tranche C			$	1,350		$	1,350		$	1,350		$	1,350		$	1,350		$	126,900		$	133,650		$	133,650
	Weighted average interest rate (variable)			4.62	%		5.40	%		6.53	%		7.28	%		7.80	%		8.11	%		6.62	%
Senior subordinated notes			$	—		$	—		$	—		$	—		$	—		$	150,000		$	150,000		$	107,250
	Average interest rate (fixed)			9.38	%		9.38	%		9.38	%		9.38	%		9.38	%		9.38	%		9.38	%
Senior discount debentures			$	—		$	—		$	—		$	—		$	—		$	17,313		$	17,313		$	21,316
	Average interest rate (fixed)			13.00	%		13.00	%		13.00	%		13.00	%		13.00	%		13.00	%		13.00	%
Capital leases and other long-term			$	1,583		$	1,710		$	910		$	996		$	1,058		$	5,924		$	12,181		$	12,181
	Average interest rate (fixed)			8.06	%		8.09	%		8.11	%		8.13	%		8.16	%		9.46	%		8.34	%
*Interest Rate Derivatives:*
Variable to Fixed Interest Rate Swap
	Notional amount								$	217,500														$	14,152
		Fixed Rate Payable		5.99	%		5.99	%		—			—			—			—			5.99	%
		Weighted average Variable Rate Receivable		1.37	%		1.61	%		—			—			—			—			1.49	%

BUSINESS

Our Company

We began operations in May 1999 when we completed the acquisition and integration of four local telephone companies in Alaska. Each of the businesses we purchased had been operating in their local markets for over 50 years. Since 1999, we have invested in upgrading our network and service capabilities and improved our cost management in our local telephone operations. As a result, our core local telephone business has generated stable revenues and cash flows since 2000.

Our Service Offerings

Video Entertainment. In the third quarter of 2003 we began offering customers in Alaska satellite video entertainment through a partnership arrangement with DISH Network.

Competitive Strengths

We enjoy strong operating margins and attractive growth prospects due to the following competitive strengths:

•: We are the incumbent local telephone company in Anchorage, Fairbanks, Juneau, the Kenai Peninsula and more than 70 other communities.
•: We are the second-largest wireless communications services provider in Alaska and our statewide wireless network covers over 70% of the population.
•: We are the second-largest provider of Internet access services and the largest provider of DSL services in Alaska.

Favorable Alaskan Market Conditions. We believe we have an attractive and growing potential customer base. For the three year period from 2000 to 2002, the median household income in Alaska was 28% higher than the average in the rest of the United States, and Alaskans spent 33% more on communications services than other Americans. According to the U.S. Census Bureau, over the past 20 years, the Alaskan population has increased by more than 2% per year — nearly triple the national average. From 2000 to 2002, federal government expenditures in Alaska increased by a total of 38% while the national average increased by only 21%. We believe these factors will continue to contribute to our stability and growth, and provide us with an advantage relative to comparable communications companies located in other states. We believe that the Alaskan communications market's combination of large geographic size and isolated markets featuring both major metropolitan areas and small, dense population clusters reduces the likelihood of entry by new integrated facilities- based service providers.

Corporation, most recently as a member of the Executive Management Committee and as Chief Integration Officer. David Wilson, who was previously CFO of Triumph Communications and DIRECTV Broadband, has joined us as our Chief Financial Officer. In addition to Ms. Pelletier and Mr. Wilson, David C. Eisenberg and Sheldon Fisher recently joined us from Sprint as Senior Vice President, Corporate Strategy and Development and Senior Vice President, Sales and Product Marketing, respectively. Andrew Coon has also joined us as Director of Business Sales and Services from General Communications Inc., our principal competitor, where he was Director, Major Strategic Accounts and former Vice President of Sales. Under the leadership of our senior management team, we have refocused our company to better serve the needs of consumer and business customers in Alaska.

Business Strategy

Our goal is to be the premier telecommunications services provider in our markets and to maintain and grow our cash flow by capitalizing on:

•: our ability to provide a broad array of communications services;
•: our extensive facilities-based network; and
•: our long history of meeting the communications needs of the customers of our unique state.

We consider the following strategies to be integral to achieving our goal:

•: maintaining and increasing the number of loyal consumer, business and wholesale customers that we serve and having our customers buy more of our services and regularly refer new customers to us;
•: offering our customers an integrated bundle of telecommunications services including local telephone, wireless, Internet, long distance, messaging and video entertainment;
•: capitalizing on our significant existing investment in our technologically advanced networks to provide feature-rich, high-quality and highly reliable telecommunications services such as DSL and broadband wireless service to our customers;
•: increasing our margins through ongoing process improvements, strategic sourcing initiatives, reduced costs and improved operating efficiencies; and
•: exploring profitable strategic acquisitions of other telecommunications businesses.

Products, Services and Revenue Sources

We offer a broad portfolio of telecommunications services to consumer, business and wholesale customers in our markets. We believe that as the communications marketplace continues to converge and competition continues to enter the market the ability to offer an integrated package of communications products will provide a distinct competitive advantage, as well as increase customer loyalty, and thereby decrease customer turnover. We complement our local telephone services by actively marketing our wireless, Internet, long distance and other service offerings to our customers who subscribe to only some of our services.

The following table sets forth the components of our consolidated revenues for the years ended December 31, 2001, 2002 and 2003:

			Revenue for the Year Ended December 31,
			2001				2002				2003
			Amount		Percent		Amount		Percent		Amount		Percent
			(dollars in millions)
Source(1)
	Local network service		$	96.3	29.3	%	$	99.5	29.3	%	$	96.4	29.8	%
	Network access			103.0	31.3			108.3	31.8			97.8	30.2
	Deregulated and other revenue			22.2	6.7			18.6	5.5			21.3	6.6

		Total local telephone		221.4	67.3			226.4	66.6			215.4	66.6
	Wireless			41.9	12.8			43.2	12.7			46.5	14.4
	Directory(2)			33.9	10.3			33.6	9.9			11.6	3.6
	Internet			13.7	4.2			20.8	6.1			33.0	10.2
	Interexchange			17.6	5.4			16.1	4.7			17.0	5.2

		Total	$	328.5	100.0	%	$	340.2	100.0	%	$	323.5	100.0	%

(1): For more information on our segments, including statements of profit and loss, see Note 17 "Business Segments" to our audited consolidated financial statements included elsewhere in this prospectus
(2): On May 8, 2003, we completed the sale of a majority interest (87.42%) in our Directories Business. Subsequently, on August 27, 2003, we disposed of substantially all of our remaining interest in the Directories Business. As a result of these disposals, we own less than 0.1% of the Directories Business and accordingly no longer record the revenue and expense of the Directories Business.

Local Telephone

We provide local telephone service through our four local telephone companies. Local telephone revenue consists of local network service, network access (including universal service revenue), and deregulated and other revenue, each of which is described below.

Local Network Service

Local network service consists of basic local network service and competitive local network service.

Basic Local Network Service. Basic local network service enables customers to originate and receive telephone calls within a defined "exchange" area. We provide basic local services on a retail basis to consumer and business customers, generally for a fixed monthly charge. The maximum amount that can be charged to a customer for basic local services is determined by rate proceedings involving the RCA. We charge business customers higher rates to recover a portion of the costs of providing local service to consumers, as is customary in the industry. Basic local service also includes non-recurring charges to customers for the installation of new products and services and recurring charges for enhanced features such as call waiting and caller identification.

At December 31, 2003, approximately 52% of our retail access lines served consumers and 48% served business customers. Currently, monthly charges for basic local service for consumers range from $9.42 to $16.30 in our service areas, compared to the U.S. national average for urban areas of $14.59 for 2002. Monthly charges for business customers range from $17.65 to $35.00 in our service areas,

compared to the national average for urban areas of $33.64 for 2002. See "Regulation" for further discussion of regulatory matters including our local network service rate proceedings.

The table below sets forth the change in our number of access lines from December 31, 1999 to December 31, 2003. The number of access lines shown represents all revenue producing access lines connected to both retail and wholesale customers.

		As of December 31,
		1999	2000		2001		2002		2003
Retail access lines		281,726	272,936		261,002		236,148		220,818
Wholesale access lines		15,680	17,303		22,859		22,148		19,157
Unbundled network elements		28,202	39,221		49,062		64,711		74,246

	Total local telephone access lines	325,608	329,460		332,923		323,007		314,221
Percentage change			1.2	%	1.1	%	(3.0	)%	(2.7	)%

We believe that future access line growth is dependent on, among other things, the economic outlook in Alaska and the United States, the impact of technology and competition on line demand and population growth in our service areas.

Competitive Local Network Service. We also provide interconnection through wholesale access to our basic local service and through leasing unbundled network elements, or UNEs, to our competitors as required by the federal law. Revenues for these services are included in local network service revenues. In November of 2001, we were authorized by the RCA to implement an interim and refundable rate increase of $1.07 per UNE loop for our Anchorage service area, increasing the total rate to $14.92 from $13.85. In the Fairbanks and Juneau service areas we currently provide UNE loops at rates of $19.19 and $16.71 per loop, as of December 31, 2003. We also currently provide UNE platforms in Fairbanks and Juneau. Because of a decision by the Alaska Supreme Court the availability of UNEs in Fairbanks and Juneau is limited to existing users pending the outcome of the RCA's rural exemption remand proceeding. We provided 93,403 lines to competitors in the Anchorage, Fairbanks and Juneau service areas on either a wholesale or UNE basis as of December 31, 2003. We believe the UNE rates in place in all of our markets are below our embedded and forward looking cost and are therefore non-compensatory. See "Regulation" for further discussion of regulatory matters, including interconnection under the 1996 Act.

While there is some seasonality in local network service, represented primarily by reduced line demand in the Alaskan winter as tourists and seasonal residents seek warmer climates and seasonal businesses close for the winter, operating results for local telephone services are not materially impacted by seasonal factors.

Network Access

Network access services arise in connection with the origination and termination of long distance, or toll, calls and typically involve more than one company in the provision of such long distance service on an end-to-end basis. Since toll calls are generally billed to the customer originating the call, a mechanism is required to compensate each company providing services relating to the call. This mechanism is the access charge, which we bill to each interexchange carrier for the use of our facilities to access the customer. We also receive universal service revenue, which we include in our reported network access revenue. These components of network access revenue are described below.

Intrastate Access Charges. We generate intrastate access revenue when an intrastate long distance call that involves an ACS Group LEC and an interexchange carrier is originated and terminated within Alaska. The interexchange carrier pays us an intrastate access charge for either terminating or

originating the call. We record the details of the call through our carrier access billing system and receive the access payment from the interexchange carrier. We also provide billing and collection services for interexchange carriers through negotiated agreements for certain types of toll calls placed by our local customers. ACSA, ACSAK and ACSF are under their own tariffs for intrastate access. In non-competitive areas, ACSN participates in a mandatory statewide tariff and access charge pooling arrangement that is administered by the Alaska Exchange Carriers Association, or the AECA. The access charges for our intrastate services are regulated by the RCA.

Interstate Access Charges. We generate interstate access revenue when an interstate long distance call is originated from an local calling area in Alaska that is served by our local telephone operations and is terminated in a local calling area in another state, and vice versa. We bill interstate access charges in a manner similar to intrastate access charges. However, interstate access charges are regulated by the FCC rather than the RCA. Our local telephone companies participate in a nationwide tariff and access charge pooling arrangement that is administered by the National Exchange Carrier Association ("NECA") for all our local telephone companies, except ACSA. ACSA participates in the NECA common line tariff, but has its own interstate access tariff for traffic sensitive and special access services. Common line revenues billed to the end user for the FCC-mandated interstate charges are also categorized as interstate access revenue.

Universal Service Revenue. We are required to contribute to the Federal Universal Service Fund. In general, these funds are created to subsidize telecommunications services in rural and high-cost service areas of the United States, including Alaska. We currently receive federal Universal Service revenue in certain of our local telephone service areas. Universal service revenue supplements the amount of local service revenue we receive to ensure that basic local service rates for customers in high cost rural areas are not significantly higher than rates charged in lower cost urban and suburban areas. The 1996 Act prescribed new standards applicable to universal service, including mechanisms for defining the types of services to be provided as part of a universal service program, specific goals or criteria applicable to universal service programs, new qualifications for receipt of universal service funding and new requirements for contributions to universal service funding. The FCC, in conjunction with a federal-state joint board composed of FCC and state commission members, has been working since passage of the 1996 Act to implement these new statutory provisions. While new cost-identification models for non-rural local carriers were adopted effective on January 1, 2000, similar models for rural carriers were rejected by the FCC, leaving previous Universal Service Fund ("USF") calculations based on embedded costs in place for the Federal High-Cost Fund. In accordance with the 1996 Act's requirement to eliminate implicit subsidies, the FCC has specifically identified and renamed certain support mechanisms that had previously been provided implicitly through access revenue. It also made all support portable to competitive local exchange carriers ("CLECs") on a per-line basis. A joint board recently recommended to the FCC some changes to the Federal Universal Service Funds and the FCC will examine modifications to the universal service funding mechanisms.

Interstate access, intrastate access, and universal service funding are all influenced by both LEC cost levels and by competitive local market penetration. Toll traffic originating or terminating on a competitors ' network does not generate access billings to interexchange carriers for us. Many of the underlying factors in jurisdictional cost separations studies that allow network costs to be recovered through access charges are diminished as competitive market penetration increases. Universal service funding may also diminish as a result of competitive local market penetration. Under FCC rules, when a CLEC is named an "eligible telecommunications carrier," as GCI has been in Anchorage, Fairbanks and Juneau, universal service funding becomes portable to the CLEC on a per-line basis, further eroding the ILECs' revenue.

Operating results for network access services are not materially impacted by seasonal factors.

Deregulated and Other Revenue

Deregulated and other revenues consist of billing and collection contracts, space and power rents, pay telephone service, customer premise equipment sales, and other miscellaneous revenues generated by our local telephone operations. We seek to capitalize on our local presence and network infrastructure by offering these additional services to customers and interexchange carriers. Deregulated and other revenue is generally not subject to seasonal impacts on operating results.

Wireless

We provide statewide mobile and fixed voice and data communications services throughout Alaska under the ACS brand name. Our wireless segment generates revenue through subscriber access charges, airtime usage, toll charges, connection fees, roaming revenues, and enhanced features, such as short messaging services and voicemail. A subscriber may purchase services separately or may purchase rate plans that package these services in different ways to fit different calling patterns and desired features.

Subscribers. The table below sets forth the annual growth in the number of our wireless subscribers served and our total covered population from December 31, 1999 to December 31, 2003.

	As of December 31,
	1999		2000		2001		2002		2003
Estimated covered population	460,802		462,057		468,622		478,413		480,422
Ending subscribers	73,068		75,933		80,120		82,220		87,017
Ending penetration	15.9	%	16.4	%	17.1	%	17.2	%	18.1	%

We believe there are opportunities to improve the penetration rates of our wireless operations throughout Alaska, and in particular, southeast Alaska. We also believe that the market for wireless services will continue to grow with expansion of the wireless industry as a whole, and our planned deployment of data services on our new CDMA 1xRTT and EVDO network. CDMA 1xRTT will provide wireless voice and data services for our customers while EVDO will provide broadband wireless data services.

Licenses. We own 800 megahertz B side cellular licenses which cover the major population centers in Alaska, including Anchorage, Fairbanks, Juneau and the Kenai Peninsula. Today, these B side frequencies support our TDMA networks. We also own several 10 megahertz E Block PCS licenses covering the entire state including Anchorage, Fairbanks and Juneau. During 2002, we purchased 10 megahertz F Block PCS licenses covering Fairbanks and Juneau. We are currently building a commercial network using CDMA 1xRTT with plans to launch during the second quarter of 2004, which will initially be supported on our PCS spectrum.

Seasonality. Wireless revenue declines slightly in the winter months and increases in the summer months due to Alaska's northern latitude and the wide swing in available daylight and changes in weather patterns between summer and winter and their effect on business, tourism and subscriber calling patterns.

Internet

We provide Internet access services to approximately 46,000 customers. In order to offer Internet access, we provide local dial-up telephone numbers for our customers. We are currently able to offer high-speed DSL service to approximately 72% of our local access lines in our major local telephone service territories. These local dial-up numbers and dedicated DSL connections allow customers access, through a modem connection on their computer, to a series of computer servers we own and maintain. These servers allow customers to access their e-mail accounts and to be routed to local access points

that connect customers to the Internet. We charge customers either a flat rate for unlimited use or a usage sensitive rate. Operating results for Internet access services are not materially impacted by seasonal factors.

Long Distance

We currently have approximately 43,000 long distance customers, which we believe represents approximately 5% of total long distance revenues in Alaska.

We own fiber capacity for high-speed links within Alaska and for termination of traffic outside Alaska. We also resell the services of other long distance carriers.

We are subject to numerous conditions imposed by the RCA and, to a lesser degree, by the FCC on the manner in which we conduct our long distance operations. Among the conditions applied to our long distance businesses are those which:

•: require us to hold all books and records, management, employees and administrative services separate, except that services may be provided among affiliates through arm's length affiliated interest agreements,
•: prohibit certain of our local telephone companies (ACSA, ACSAK, ACSN and ACSF) from bundling local and intra-state long distance services until competition develops in their local markets and
•: prevent our long distance company from jointly owning telephone transmission or switching facilities with our local telephone service providers and from using our local telephone service provider's assets as collateral for our long distance company's indebtedness.

Although there is some seasonal impact on customer usage patterns for long distance, operating results are not materially impacted by seasonal factors.

Video Entertainment

In the third quarter of 2003 we began offering customers in Alaska satellite video entertainment through a partnership arrangement with DISH Network.

Sales and Marketing

We market our product and service offerings under the "Alaska Communications Systems" and "ACS" brands, subject to regulatory and strategic business considerations. Recently, we reorganized to more efficiently sell and service all of our product offerings through single points of customer contact.

Key components of our sales and marketing strategy include:

•: establishing name recognition of the ACS brand across all product and service offerings,
•: making, buying and using ACS products and services easier than ever,
•: marketing all of our offerings to each consumer to obtain a greater percentage of each consumer's telecommunications services expenditures,
•: providing convenient and valuable bundles of products and services,
•: centralizing marketing functions to optimize impact and efficiency,
•: improving quality and reliability of customer service,

•: developing and delivering to the market new products and services driven by a view of total customer needs,
•: driving greater productivity from direct sales efforts, and
•: teaming sales and service for a complete and seamless customer experience.

We believe that we can leverage our position as an integrated, one-stop provider of telecommunications services with strong positions in local access, wireless, Internet and long distance markets. By pursuing a marketing strategy that takes advantage of these characteristics and that facilitates cross-selling and packaging of our products and services, we believe we can increase penetration of new product offerings, improve customer retention rates, increase our share of our customers' overall telecommunications expenditures, and achieve continued revenue and operating cash flow growth.

Network Facilities

As of December 31, 2003, we owned 65 host switches serving over 314,000 access lines. All of our access lines are served by digital switches provided predominately by Nortel Networks Corporation. Our switches are linked through a combination of extensive aerial, underground and buried cable, including 640 sheath miles of fiber optic cable and digital microwave and satellite links. We have 100% single-party services, or services of one customer per access line, and believe substantially all of our major switches have current generic software upgrades installed which allows for the full range of enhanced customer features, such as call waiting, caller identification and call forwarding.

We have integrated numerous network elements to offer a variety of services and applications that meet the increasingly sophisticated needs of our customers. These elements include Signal System 7 signaling networks, voice messaging platforms, digital switching, DSL and, in some communities, integrated service digital network access. As the telecommunications industry experiences significant changes in technology, customer demand and competition, we intend to introduce additional enhancements.

Network operations and monitoring are provided by our network operating control center located in Anchorage. The network operating control center has technicians staffed seven days a week, 24 hours a day and monitors both wireline and wireless switching. We also have customer care call center and walk-in facilities in Anchorage and Fairbanks along with additional walk-in customer care facilities in Juneau, Sitka, Kenai/Soldotna, Kodiak, North Pole and Homer. These customer care facilities sell and service all of our product lines. All of these facilities offer extended business hours to efficiently handle customer inquiries and orders for service.

We have enhanced our network to accommodate developing products and technology. We completed our Multi-Protocol Label Switching over Asynchronous Transfer Mode network, referred to as our MPLS/ATM networks in early 2002. Core MPLS/ATM nodes were installed in Anchorage, Fairbanks, Juneau, the Kenai Peninsula, the Mat-Su valley and Seattle. We believe the MPLS/ATM network enhances our capability to provide a complete suite of converged telecommunications, data and video services and achieve significant operating efficiencies. We currently offer a variety of enhanced products and services and are able to converge them all over our MPLS core network, including the following:

•: virtual private networks and lines,
•: voice over Internet Protocol services,
•: transparent local area networks (LAN) and proprietary LANs and wide area networks (WAN),

•: high speed Internet access,
•: managed services and
•: video conferencing.

Our wireless operations consist of four digital switching centers, 140 cell sites and three repeaters covering over 70% of Alaska's population and substantially all major population centers and highway corridors in the state plus one analog switch and cell site covering Barrow, Alaska. Our switching and cell site infrastructure is linked by fiber, wireline and digital microwave, primarily owned by us. Our TDMA wireless voice network consists of three Ericsson digital switches, one analogue switch and 105 cell sites using our 800 megahertz B side cellular licenses. Our TDMA network covers the major population centers in Alaska, including Anchorage, Fairbanks, Juneau and the Kenai Peninsula. We are currently building a commercial wireless voice and data CDMA 1xRTT network with plans to launch during the second quarter of 2004. To support this planned launch, we have installed one Nortel digital CDMA switch and over 35 cell sites as of March 2004. We have also overlayed EVDO high speed data capabilities on this CDMA network, primarily in Anchorage, which we expect to launch for commercial service in the second half of 2004. Over time, we plan to continue to expand our CDMA 1xRTT and EVDO network and migrate our TDMA subscribers onto our CDMA network. Our CDMA network will initially be deployed using our 10 megahertz E and F Block PCS spectrum, but we expect to eventually deploy CDMA technology over our 800 megahertz B side cellular licenses and phase out TDMA service at some time in the future.

Our facilities-based long distance network connects the major population center of Anchorage, Fairbanks, Juneau and the Kenai Peninsula to each other primarily over owned fiber optic facilities or IRU capacity. We also own undersea IRU fiber optic capacity connecting Alaska to the rest of the world via Seattle, Washington and lease undersea fiber optic capacity over a redundant route connecting Alaska to the rest of the world via Portland, Oregon.

Customers

We have three basic types of customers for the services of our LECs:

•: consumer and business customers located in our local service areas that pay for local phone service,
•: long distance carriers that pay for access to long distance calling customers located within our local service areas and
•: CLECs that pay for wholesale access to our network in order to provide competitive local service.

As of December 31, 2003, approximately 52% of our retail access lines served consumers while 48% served business customers.

We have approximately 87,000 wireless subscribers, 46,000 Internet subscribers and 43,000 long-distance subscribers consisting substantially of retail consumer and business customers.

GCI accounted for 10% of consolidated 2003 revenues and 15% of our local telephone revenues. No other customers accounted for more than 10% of consolidated revenue.

Competition

Local Telephone Service

Our local telephone services operations may be subject to any of several types of competition:

•: facilities-based competition from providers with their own local service network,
•: resale competition from resale interconnection, or providers who purchase local service from us at wholesale rates and resell these services to their customers,
•: competition from UNE interconnection, that is, providers who lease UNEs from us, and
•: alternatives to local service networks, including wireless, IP, satellite and cable telephony.

In September 1997, GCI and AT&T Alascom, the two largest long distance carriers in Alaska, began providing competitive local telephone services in Anchorage. GCI competes principally through UNE interconnection with our local telephone subsidiary's, ACSA, facilities, while AT&T Alascom competes primarily by reselling ACSA's services. Competition is based upon price and pricing plans, types of services offered, customer service, billing services and quality and reliability of service. GCI has focused principally on advertising discount plans for bundled services. AT&T Alascom's strategy has been to resell ACSA's service as part of a package of local and long distance services. As a result, ACSA now has only approximately 49% competitive market penetration as of December 31, 2003. We expect GCI and AT&T Alascom to continue to compete with us for local telephone business in many of our markets.

As of December 31, 2003, we estimate that we now have approximately 76% market share in Fairbanks. GCI has competed in Fairbanks primarily through reselling services and through UNE interconnection. Similar trends are being experienced by ACSAK in our Juneau market where, as of December 31, 2003, we have approximately 77% market share.

We expect increasing competition from providers of various services that bypass our network. Long distance companies may construct, modify or lease facilities to transmit traffic directly from a user to a long distance company. Cable television companies also may be able to modify their networks to partially or completely bypass our local network. GCI, the dominant cable operator in Alaska and a CLEC, is currently testing cable telephony service and recently announced plans to start switching its local phone service customers in Anchorage over to its cable system in 2004.

In addition, while wireless telephone services have historically complemented traditional LEC services, we anticipate that existing and emerging wireless technologies may increasingly compete with LEC services. For example, we are deploying CDMA 1xRTT and EVDO wireless services in our markets and our principal wireless competitor, Dobson is deploying GSM wireless services. Both CDMA and GSM technologies may serve as a satisfactory wireless alternative to traditional LEC wireline services. At this time it is not possible to predict the impact of the growth in wireless networks on our share of the local market. Technological developments in wireless telephone features, digital microwave and other wireless technologies are expected to further permit the development of alternatives to traditional wireline services. The FCC's requirement that ILECs offer wireline-to-wireless number portability may increase the competition our ILECs face from wireless carriers.

Wireless Services

The wireless telecommunications industry is experiencing significant technological change, as evidenced by the increasing pace of improvements in the capacity and quality of digital technology, shorter cycles for new products and enhancements, and changes in consumer preferences and

expectations. We believe that the demand for wireless telecommunications services is likely to increase significantly as equipment costs and service rates continue to decline and equipment becomes more convenient and functional. Competition is based on price, quality, network coverage, packaging features and brand reputation. There are six PCS licensees in each of our wireless service areas. We hold B side cellular licenses for Alaska's major communities and PCS licenses covering the entire state, including Anchorage, Fairbanks, Juneau and the Kenai Peninsula.We currently compete with at least one other wireless provider in each of our wireless service areas, including Dobson and Alaska DigiTel. We believe that the unique and vast terrain and the high cost of a PCS system build out make additional competitive entrance into markets outside of Anchorage uneconomical at this time.

As the market for simple wireless voice services approaches maturity, providers are experiencing downward pressure on price. We are positioning ourselves to offset this impact by bringing new higher margin services to market, by developing products for targeted market segments and leveraging our advantage in market share and geographical coverage to attract new customers and increase monthly revenues from existing customers. We continuously evaluate new service offerings in order to differentiate us from our competitors, produce additional revenues and increase margins. The FCC's requirement that wireless carriers implement number portability may decrease customer loyalty and increase wireless competition.

Internet Services

The market for Internet access services is highly competitive in most markets in the state. There are few significant barriers to entry, and we expect that competition will intensify in the future. We primarily compete with GCI in the market for Internet access services. We believe that our ability to compete successfully will depend upon a number of factors, including the reliability and security of our network infrastructure, the ease of access to the Internet, the availability of broadband ISP access and the pricing policies of our competitors.During 2003, we continued to deploy our DSL services in Anchorage, Fairbanks, Juneau, Kenai/Soldotna, Homer and Sitka, Alaska for both consumer and business applications.

Long Distance Services

The long distance telecommunications market is highly competitive. Competition in the long distance business is based primarily on price, although service bundling, branding, customer service, billing services and quality play a role in customer's choices to some extent. We currently offer long distance service to customers located primarily in the more populous communities within our service territory. AT&T Alascom and GCI are currently the two major competing long distance providers in Alaska. We believe we currently have approximately 5% of total interexchange revenues in Alaska. We provide traditional "1+" direct distance dialing, toll-free services, calling cards and private line services for data and voice applications. We have also introduced flat-fee long distance programs. These programs allow customers to purchase interstate minutes of use in blocks of time for a single monthly fee. We expect to continue offering innovative products of this nature in the future.

Video Entertainment

ACS is a reseller of DISH Network. DISH Network's primary competitor is GCI, the cable provider in most of Alaska with a dominant position in the video entertainment sector.

Employees

As of December 31, 2003, we employed a total of 1,087 regular full-time employees, 873 of whom are represented by the International Brotherhood of Electrical Workers, Local 1547 ("IBEW"). Management considers employee relations to be good with both the represented and non-represented

100

workforce. On November 2, 1999, the IBEW membership for our company ratified the terms of a master collective bargaining agreement that governs the terms and conditions of employment for all IBEW represented employees working for us in the State of Alaska.The master agreement embraces a labor-management relationship that is founded on trust, cooperation and shared goals. The November 1999 agreement, which expires December 31, 2006, provides for wage increases up to 4% in specified years based on the annual increases in the consumer price index for Anchorage as reported by the U.S. Department of Labor CPI-U. The last wage increase under the agreement was implemented in January 2004 and the next scheduled wage review is in November 2004. The master agreement also limits the increases in our health and welfare contributions for represented employees to 4% annually.

Non-represented employees qualify for wage increases based on individual and company performance, and key employees are also eligible for performance-based incentives. We provide a total benefits package, including health, welfare, and retirement components, that is competitive in our market.

Properties

At December 31, 2003, our telecommunications network includes over 640 sheath miles of fiber optic cable, over 188 switching facilities and a statewide wireless network. In addition, we own fiber capacity for high-speed links within Alaska and for termination of traffic in the continental United States. We plan to continue enhancing our network to meet customer demand for increased bandwidth and advanced services. See "Business — Network Facilities." We own approximately 334,000 square feet of facilities in Anchorage, Alaska, which includes our corporate headquarters. We also own or lease facilities in our service areas across Alaska. We believe this space is sufficient for us to conduct our business.

Local Telephone

Our primary local telephone properties consist of 188 switching facilities. We own most of our administrative and maintenance facilities, customer service center, central office and remote switching platforms and transport and distribution network facilities. Our local telephone assets are located in Alaska. Our transport and distribution network facilities include a fiber optic backbone and copper wire distribution facilities that connect customers to remote switch locations or to the central office and to points of presence or interconnection with interexchange carriers. These facilities are located on land pursuant to permits, easements, right of ways or other agreements.

Substantially all of our assets (including those of our subsidiaries) are pledged as collateral for our senior obligations and will be pledged as collateral for our new revolving credit facility. See "Description of Other Indebtedness—New Revolving Credit Facility" for further discussion.

Wireless

We have four digital switching centers, 140 cell sites and three repeaters covering substantially all major population centers and highway corridors in Alaska plus one analog switch and cell site covering Barrow, Alaska. We lease the land or tower space on which 130 sites are located, and own the remaining ten sites.

Internet

We own or lease point of presence facilities that permit our dial-up and DSL customers to access the Internet in more than 30 communities serving the majority of Alaska's populated areas. These communities are linked over both owned and leased facilities to the Internet at Seattle, Washington.

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Interexchange

We are a facilities based interexchange carrier. We have invested in fiber optic capacity through an indefeasible right of use that provides bandwidth between our Anchorage, Fairbanks, and Juneau locations and Seattle, Washington.We also lease transport facilities and have arrangements with other interexchange carriers to terminate traffic in the lower 48 states.

Legal Proceedings

We are involved in the various legal proceedings involving regulatory matters described under "Regulation."

In addition, a class action lawsuit was filed against us on March 14, 2001. The litigation alleges various contract and tort claims concerning our decision to terminate our Infinite Minutes long distance plan. A trial is scheduled for September 2004. A class of approximately 24,000 plaintiffs is expected to be certified. We believe this suit to be without merit and intend to maintain a vigorous defense.

On September 15, 2003, we received notification that the State of Alaska was terminating the TPA, a contract under which we were obliged to provide comprehensive telecommunications services to the State of Alaska for a period of five years. On October 1, 2003, we announced that we had entered into a voluntary settlement agreement with the State of Alaska under which we made a cash payment to the State of Alaska of approximately $3.4 million and transfered to the State of Alaska title to certain capital equipment. The parties agreed to cooperate to complete disentanglement by December 31, 2003. As of December 31, 2003, we and the State had completed the majority of our settlement agreement disentanglement obligations. All services provided by us under the TPA prior to January 1, 2004 were either transitioned to other service providers at the direction of the State or transitioned to our current commercial rates for such services. Our remaining obligations under the settlement agreement were completed in the first quarter of 2004. We cannot guarantee that further disputes will not arise in connection with the completion of the disentanglement procedures and as a result we cannot currently estimate the impact that the termination, including the total costs of disentanglement, will have on our revenues or results.

GCI filed a complaint against us with the FCC regarding various service ordering and provisioning issues. The parties have negotiated a resolution of this matter.

We have disputes with Dobson concerning certain reciprocal requirements and the ownership of a tower. We cannot predict when or how these matters will be resolved.

We were named as a defendant in an action brought by Fireweed Communications regarding our use of our Eagles Nest communications tower. The parties have reached an agreement to settle the matter and the case has been dismissed.

We are involved in various other claims, legal actions and regulatory proceedings arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

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REGULATION

The following summary of the regulatory environment in which our business operates does not describe all present and proposed federal, state and local legislation and regulations affecting the telecommunications industry in Alaska. Some legislation and regulations are currently the subject of judicial review, legislative hearings and administrative proposals which could change the manner in which this industry operates. We cannot predict the outcome of any of these matters or their potential impact on our business. Regulation in the telecommunications industry is subject to rapid change, and any such change may have an adverse effect on us in the future. See "Risk Factors — Risks Relating to Our Business."

Overview

The telecommunications services we provide and from which we derive a large majority of our revenue are subject to extensive federal, state and local regulation. Our local exchange carrier, or LEC, subsidiaries are regulated common carriers and have the right to set maximum rates at a level that allows us to recover the reasonable costs incurred in the provision of regulated telecommunications services and to earn a reasonable rate of return on the investment required to provide these services. Because they face competition, however, most of our LEC subsidiaries may not be able to realize their allowed rates of return.

In conjunction with the recovery of costs and establishment of rates for regulated services, our LEC subsidiaries must first determine their aggregate costs and then allocate those costs between regulated and nonregulated services, then between state and federal jurisdictions, and finally among their various interstate and intrastate services. This process is referred to as "separations" and is governed primarily by the FCC's rules and regulations. The FCC is considering whether to modify or eliminate the current separations process. This decision could indirectly increase or reduce earnings of carriers subject to separations rules by reallocating costs between the federal and state jurisdictions. Maximum rates for regulated services and the amount of high-cost support are set by the FCC with respect to interstate services and by the RCA with respect to intrastate services.

At the federal level, the FCC generally exercises jurisdiction over services of telecommunications common carriers, such as us, that provide, originate or terminate interstate or international communications and related facilities. The FCC does not directly regulate enhanced services and has preempted inconsistent state regulation of enhanced services. Our wireless services use FCC radio-frequency licenses and are subject to various FCC regulations, including E911 and number portability requirements. The RCA generally exercises jurisdiction over services used to provide, originate or terminate communications between points in Alaska as well as related facilities. In addition, pursuant to the federal Telecommunications Act of 1996, or Telecommunications Act, federal and state regulators share responsibility for implementing and enforcing certain policies intended to foster competition in local telecommunications services. In particular, state regulatory agencies have substantial oversight over the provision by incumbent local exchange carriers, or ILECs, of interconnection and non-discriminatory network access to competitive local exchange carriers, or CLECs. Local governments often regulate the public rights-of-way necessary to install and operate networks, may require communications services providers to obtain licenses or franchises regulating their use of public rights-of-way, and may require carriers to obtain construction permits and abide by building codes.

Federal Regulation

We must comply with the Communications Act of 1934, as amended, or Communications Act, and regulations promulgated thereunder which require, among other things, that communications carriers offer interstate services at just, reasonable and nondiscriminatory rates and terms. The amendments to

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the Communications Act contained in the Telecommunications Act significantly changed and are expected to continue to change the telecommunications industry. Among other changes, the Telecommunications Act promotes competition in local telecommunications services by removing barriers to entry and through interconnection and network access requirements, and makes universal service support explicit and portable. We must obtain FCC approval before we transfer control of any of our common carrier subsidiaries or our radio frequency licenses or authorizations, make such an acquisition or discontinue an interstate service.

Interconnection with Local Telephone Companies and Access to Other Facilities

In order to ensure access to local facilities and services at reasonable rates, the Telecommunications Act imposes a number of access and interconnection requirements on LECs. Generally, a LEC must:

•: not prohibit or unreasonably restrict the resale of its services;
•: provide for telephone number portability, so customers may keep the same telephone number if they switch service providers;
•: ensure that customers are able to route their calls to telecommunications service providers without having to dial additional digits;
•: provide access to their poles, ducts, conduits and rights-of-way on a reasonable, non-discriminatory basis; and
•: when a call originates on its network, compensate other telephone companies for terminating or transporting the call.

Most ILECs have the following additional obligations under the Telecommunications Act:

•: negotiate in good faith with any carrier requesting interconnection;
•: provide interconnection for the transmission and routing of telecommunications at any technically feasible point in its network on just, reasonable and nondiscriminatory rates, terms and conditions;
•: provide access to unbundled network elements, or UNEs, such as local loops, switches and trunks, or combinations of UNEs at nondiscriminatory, cost-based rates;
•: offer retail local telephone services to resellers at discounted wholesale rates;
•: provide notice of changes in information needed for another carrier to transmit and route services using its facilities; and
•: provide physical collocation, which allows a CLEC to install and maintain its network termination equipment in an ILEC's central office, or to obtain functionally equivalent forms of interconnection.

Because our ILEC subsidiaries other than ACSA qualify as rural LECs, or RLECs, under the Telecommunications Act, a statutory exemption from the interconnection requirements for those carriers applies until we receive a bona fide request for interconnection and the RCA lifts the exemption. The RCA must continue an exemption until it determines that interconnection is technically feasible, not unduly economically burdensome and consistent with universal service. Without such exemption, our RLECs may face more competition, declining revenues and higher costs. Even after lifting the exemption for a RLEC, the RCA may suspend or modify an interconnection requirement if it determines that such action is in the public interest and necessary to avoid a significant adverse economic impact on users, an undue economic burden or a technically infeasible requirement.

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ACSA, ACSF and ACSAK have also responded to a formal complaint brought by GCI at the FCC. The parties have negotiated a resolution of the matter.

On June 30, 1999, the APUC (the predecessor of the RCA) issued an order terminating the rural exemptions of ACSN (as to its Glacier State Study Area), ACSAK and ACSF. On October 11, 1999, the RCA affirmed the APUC's order. As a result, these RLECs were no longer exempt from the interconnection requirements applicable to ILECs, and our competitors immediately requested interconnection agreements. The Alaska Superior Court denied our request to stay and subsequently upheld the RCA's order. On December 12, 2003, the Alaska Supreme Court ruled that the termination of ACSN's rural exemption was erroneous, and the termination of ACSF and ACSAK's rural exemptions may be erroneous. The court reversed and remanded the ACSF and ACSAK decisions back to the RCA for further proceedings. A decision on these remand proceedings is expected in May 2004. During the pendency of the remand proceedings, the obligations of ACSF and ACSAK to provide UNEs to CLECs to support new customers have been suspended.

Since the RCA terminated our rural exemptions, our discretionary capital expenditures have decreased in Fairbanks and Juneau in light of the UNE-based competition. There are new subdivisions and buildings for which we have not built transmission plant and we may need to increase our capital expenditures and operating expenses in some areas in order to meet our universal service and service quality obligations under state regulation. The UNE rates set by the RCA have been set at below our cost of capital in Anchorage, Fairbanks and Juneau and we may face similar excessively low UNE rates set by the RCA if we lose our other rural exemptions. If the RCA continues to terminate the rural exemptions for ACSF and ACSAK, absent compensating measures (such as rate increases or market structure reforms, like replacing implicit subsidies by explicit support mechanisms, rate deaveraging, or regulatory flexibility), our operating results could be adversely affected.

To implement the interconnection requirements of the Telecommunications Act, the FCC adopted rules requiring, among other provisions, that ILECs price UNEs based on forward-looking economic costs using the total element long-run incremental cost methodology, and that ILECs combine UNEs for competitors when they are unable to do so themselves.

In its Triennial Review order released in August 2003, the FCC eliminated the obligation of ILECs to provide unbundled access to certain network elements, including new fiber loops, high-capacity loops and transport, and packet switches. Similarly, the FCC eliminated the requirement that line-sharing, where a CLEC offers high-speed Internet access over certain frequencies while the ILEC provides voice telephone services over other frequencies using the same local loop, be available as an unbundled element for new users. The Triennial Review order redefined the standard for determining which services are subject to mandatory unbundling. This order also provides state regulatory commissions with an increased role in determining which individual elements must be unbundled as well as the UNE platform, or UNE-P, in the markets they regulate based on detailed assessments of the status of competition. The RCA decided not to challenge the FCC's finding to eliminate the unbundling requirement for switching for medium and large business customers. In proceedings before the RCA pursuant to the Triennial Review order, we are seeking the elimination of additional unbundling requirements such as mass market switching, inter-office transport and high-capacity loops.

On March 2, 2004, the U.S. Court of Appeals for the D.C. Circuit, however, vacated the FCC's nationwide determination of impairment as to mass market switching and the FCC's delegation to state commissions of market assessments for unbundling requirements in the FCC's Triennial Review order. The court upheld the FCC's termination of unbundling requirements for new fiber loops, packet switches, line sharing and high-capacity transport services. The Appeals Court remanded the matter back to the FCC for further proceedings consistent with its order. Several parties, however, have already expressed an intention to seek reconsideration or appeal of the Appeals Court's decision.

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Consequently, there is considerable uncertainty regarding the FCC's unbundling rules and the RCA proceedings to implement the FCC's rules.

In addition, the FCC is reexamining its pricing standard for UNEs and may reconsider other aspects of its new rules. The FCC is seeking comment on amending its rules to ensure that state commissions do not set UNE prices in a manner that understates ILECs' costs. The Triennial Review order clarified that, in setting UNE prices, states should adjust their assumptions about depreciation and cost-of-capital to reflect a competitive marketplace, and the FCC suggested that states consider whether accelerated rather than straight-line depreciation more accurately reflects the competitive marketplace. Furthermore, Congress may consider legislation that may modify some aspects of these rules. We cannot predict the outcome of any of these proceedings or of any action taken by the RCA pursuant to the new rules.

Interstate Access Charges

The FCC regulates the prices that ILECs charge for the use of their local telephone facilities in originating or terminating interstate transmissions. The FCC structured these prices, or access charges, as a combination of flat monthly charges paid by the end-users, or subscriber line charges, and usage sensitive charges paid by long distance carriers.

Our ILECs' interstate access charges are developed by a cost-of-service method to earn an authorized maximum rate of return. The National Exchange Carrier Association, or NECA, develops averaged access rates for participating ILECs based on the costs of these carriers. All our ILECs participate in NECA's tariff for non-traffic sensitive costs, which are primarily loop costs. While ACSA files its own traffic sensitive access tariff, which covers primarily switching costs, our other ILECs participate in NECA's traffic sensitive access tariff. Participants in a NECA tariff charge averaged access rates, pool their revenues, and distribute the revenues on the basis of each individual carrier's costs. The NECA tariffs reduce the cost burden on individual ILECs of filing tariffs and also spread some of the risks of providing interstate access services. None of our ILECs has chosen the FCC's price cap method for its interstate access charges.

In 2001, the FCC adopted an order implementing certain proposals of the Multi-Association Group, or MAG, to reform the access charge system for rural ILECs. This order governs the access charges that our ILECs can collect from long distance carriers. Among other things, the MAG plan reduces usage sensitive access charges on long distance carriers and shifts a portion of cost recovery to subscriber line charges. As a result, the aggregate amount of access charges paid by long distance carriers to ILECs has decreased and may continue to decrease. In adopting the MAG plan, the FCC determined that rate-of-return carriers, such as our ILECs, continue to be permitted to set rates based on the authorized rate of return of 11.25%. Additionally, the FCC initiated a rulemaking proceeding to investigate the MAG's proposed incentive regulation plan and other means of encouraging rate-of-return carriers to increase their efficiency and competitiveness. The MAG plan expires in 2006 and will need to be renewed or replaced at such time. We cannot predict what changes, if any, the FCC may eventually adopt.

Proposals currently being debated within the industry may result in the elimination of interstate and intrastate access charges paid by long distance carriers, and the requirement that carriers such as ACSA, ACSF, ACSAK and ACSN recover those interstate and intrastate costs from a combination of end-user charges and universal service support. The FCC has indicated it expects to take some action to reform intercarrier compensation, including access charges, in 2004 or 2005. We cannot predict what or when, the FCC may adopt any changes.

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Federal Universal Service Support

The Communications Act requires the FCC to establish a universal service program to ensure that affordable, quality telecommunications services are available to all Americans. The program at the federal level has several components, including one that pays support to LECs servicing areas for which the costs of providing basic telephone service are higher than the national average. The Telecommunications Act requires the FCC to make universal service support explicit, expand the types of communications carriers that are required to pay universal support, and allow CLECs to be eligible for universal service support, including where they serve customers formerly served by ILECs.

In May 2001, the FCC adopted a proposal from the Rural Task Force to reform universal service support for rural areas. As adopted, for an interim five-year period, until no later than July 1, 2006, eligible rural carriers will continue to receive support based on a modified embedded cost mechanism. The FCC has indicated that, for the period thereafter, it will develop a comprehensive plan for high-cost support mechanisms for rural and non-rural carriers which may rely on forward-looking costs. We are unable to predict whether and to what extent we would be eligible to receive any federal high-cost support under such a plan.

Universal service funds are only available to carriers that are designated as eligible telecommunications carriers, or ETCs, by a state regulatory commission. CLECs and other providers that have been granted ETC status are eligible to receive the same amount of universal service support per customer as the ILEC serving the same area. The FCC is reviewing many issues related to USF payments following recommendations from a Federal-State Joint Board on Universal Service, including the level of support for CLECs and the effects of payments to CLECs on support provided to ILECs. The FCC is expected to act on some of these USF issues by the end of February 2005, and some ILECs believe that revised rules may reduce their support to the extent that CLECs in their service areas receive USF support for UNE-loop based service.

The RCA granted GCI's request that it be designated an ETC in Anchorage, Fairbanks, Juneau, and Fort Wainwright, all of which are currently served by our subsidiaries. The addition of a second ETC in our service areas could increase the competition we face by providing additional revenues to our competitors, and thereby decrease our revenues. Wireless carriers have also petitioned the RCA for ETC status. In August 2003, the RCA granted ETC status to DigiTel for the Matanuska Telephone Association ("MTA") service area. In May 2003, ACSW applied for ETC status in this service area and Fairbanks. Dobson is seeking ETC status and asked the RCA to redefine our service areas on a wire center basis. If this petition is granted, Dobson might be allowed to receive USF support for serving portions but not all of our service areas. Additionally, MTA Wireless and Unicom, Inc. ("Unicom," a United Utilities, Inc. affiliate) have petitioned for ETC status for their service areas.

Our operating subsidiary companies are required to contribute to the federal USF a percentage of their revenue earned from interstate and international services. Although our rural ILECs receive payment from the federal USF, we cannot be certain of how, in the future, our contributions to the fund will compare to the support they receive from the fund. The FCC has proposed making changes to its USF contribution methodology, and we cannot predict the outcome of that proceeding or any legislation which may change the USF.

Interstate Long Distance Services

The FCC does not regulate the rates, terms or facilities of our interstate long distance services. However, we must comply with the general requirement that our charges and terms be just, reasonable and nondiscriminatory. Also, we must comply with FCC rules regarding unauthorized switching of a customer's long distance service provider, or slamming; the FCC has recently levied substantial fines on some carriers for slamming. In addition, ACSLD must post the rates, terms and conditions of its service on its Internet web site and engage in other public disclosure activities.

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The FCC required that ILECs that provide interstate long distance services originating from their local exchange service territories must have long distance affiliates which maintain separate books of account and acquire any services from their affiliated ILECs at tariffed rates, terms and conditions.

Wireless Services

The FCC regulates the licensing, construction, operation, acquisition and sale of personal communications services and cellular systems in the United States. All cellular and personal communications services licenses have a 10-year term, at the end of which they must be renewed. Licenses may be revoked for cause, and license renewal applications may be denied if the FCC determines that renewal would not serve the public interest. In addition, all personal communications services licensees must satisfy certain coverage requirements. Licensees that fail to meet the coverage requirements may be subject to forfeiture of the license.

Federal law preempts state and local regulation of the entry of, or the rates charged by, any provider of commercial mobile radio services, or CMRS, which includes personal communications services and cellular services. The FCC does not regulate such rates. The FCC imposes a variety of regulatory requirements on CMRS operators. For example, CMRS operators must be able to transmit 911 calls from any qualified handset without credit check or validation, are required to provide the location of the 911 caller within an increasingly narrow geographic tolerance over time, and as of December 31, 2003, are required to provide 911 service for individuals with speech and hearing disabilities, or TTY service. ACSW has petitioned the FCC for a limited waiver of the 911 implementation deadlines and for an extension of the TTY requirements; we cannot predict when or how the petitions will be decided.

Local number portability allows a customer to retain his or her telephone number when changing telecommunications carriers within the same local market. The FCC requires local number portability for CMRS carriers under rules that distinguish between carriers operating in the largest 100 metropolitan statistical areas and those operating outside the top 100 markets. None of the cities in which we provide wireless service is among the top 100 markets. Therefore, under the FCC's rules, if ACSW receives a request to allow an end user to retain a telephone number while changing service providers, ACSW must be capable of allowing this number portability by May 24, 2004 or within 6 months of a bona fide request. The FCC also requires that if a LEC customer wants to retain a telephone number while changing to a CMRS service provider (such as ACSW), the LEC must have the capability to allow this wireline-to-wireless number portability by May 24, 2004 or within six months of a bona fide request, where the requesting CMRS carrier's coverage area overlaps the geographic location of the LEC rate center to which the number is assigned (unless the LEC can provide specific evidence demonstrating that doing so is not technically feasible). These number portability rules are expected to increase the level of competition among CMRS service providers, but also to increase the ability of CMRS providers to win customers from LECs. We cannot predict the net impact of these new rules on us.

Internet Services

We provide Internet access services as an Internet service provider, or ISP. The FCC has classified such services as information services, so they are not subject to various regulatory obligations that are imposed on common carriers, such as paying access charges or contributing to USF. Also, the FCC generally preempts state and local regulation of information services.

In March 2002, the FCC held that high-speed Internet access service delivered using cable television facilities constitutes an "information service" (which is not subject to common carrier regulations). Although the Company's provision of high-speed Internet services over its telecommunications network is currently regulated as a telecommunications service, the FCC is

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considering whether to narrow the scope of this regulation to "non-dominant" status or reclassify such services as information services. The Company also offers a retail Internet service that is an information service under the FCC's current policies. The FCC's classification of cable modem services has been remanded by the United States Court of Appeals for the Ninth Circuit, which reiterated an earlier decision finding that cable modem services constituted both a "telecommunications service" and an "information service." The FCC is also currently giving further consideration to its regulation of high-speed Internet access services offered over cable facilities versus telecommunications facilities. The FCC may decrease regulation on the Company's broadband services or possibly subject cable modem services to certain common carrier responsibilities. If the FCC implements such a requirement, the Company may be able to supplement its own high-speed Internet access offerings by obtaining access to GCI's high-speed Internet access cable lines for its own Internet service provider.

In February 2004, the FCC determined that particular entirely Internet-based voice over Internet Protocol, or VoIP, service is an information service and exempt from such regulatory obligations. Also in February 2004, the FCC launched a comprehensive rulemaking to determine the appropriate types of regulation, including such matters as intercarrier compensation and contributions to USF, to which ISPs offering or enabling different types of services, including VoIP, should be subject. We cannot predict the outcome of these proceedings or the effect of FCC decisions in this area on our business.

Other Federal Regulations

We are subject to various other federal rules and statutes, including with regard to the use of customer proprietary network information in marketing services, and implementing capabilities to be used by law enforcement officials in executing court authorized electronic surveillance. Other FCC initiatives that may impact our regulated subsidiaries include access to poles, ducts, conduits and rights-of-way, Truth-in-Billing requirements, EEO reporting, and anti-slamming rules. These requirements may impose costs on us and limit our business opportunities.

State Regulation

Telecommunication companies are required to obtain certificates of public convenience and necessity from the RCA prior to operating as a public utility in Alaska. The RCA must also approve transfers of such certificates. The RCA regulates rates and terms for local, intrastate access and intrastate long distance services. Also, pursuant to the Telecommunications Act and the FCC's rules, the RCA decides various aspects of local network interconnection offerings and agreements. In addition, the RCA supervises the administration of the Alaska Universal Service Fund, or AUSF, and decides on ETC status for purposes of the federal USF.

Interconnection

The Telecommunications Act specifies that resale and UNE rates are to be negotiated among the parties subject to approval by the state regulatory commission, or, if the parties fail to reach an agreement, arbitrated by the state regulatory commission.

In January 1997, ACSA's predecessor, ATU, entered into an interconnection agreement with GCI, which provided for resale and UNE interconnection, and with AT&T Alascom, which provided for resale. Neither interconnection agreement contained a defined term or a termination date. Near the end of 1999, we notified GCI of our view that the interconnection agreement pertaining to ACSA had reached the end of a reasonable period of availability. In January 2000, we filed a motion with the RCA to reopen the original GCI arbitration proceedings involving ACSA for the purpose of establishing an appropriate forward looking cost model and re-pricing various interconnection services and UNEs. On October 25, 2001, the RCA granted ACSA an interim UNE rate increase. The RCA

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held a formal hearing on final Anchorage UNE rates during November 2003. We cannot predict when the RCA will issue a final order in this matter or what the outcome will be.

Subsequent to the RCA terminating the rural exemptions for the Fairbanks, Juneau-Douglas and ACSN's Glacier State study area markets, we entered into unsuccessful negotiations for interconnection agreements with GCI. Interconnection issues, including the pricing for UNEs, were subject to a RCA arbitration during 2000. On September 5, 2000, the RCA issued orders largely ratifying the findings of the arbitrator in these interconnection arbitration proceedings. The agreements were scheduled to expire on October 5, 2003, and have been extended pending arbitration of new agreements. GCI and the arbitrator have agreed to defer further work on the interconnection agreements for ACSF and ACSAK pending resolution of the rural exemption remand proceedings and the ACSA interconnection proceeding. As part of the agreement to defer these proceedings, GCI also agreed that new interconnection agreements for ACSF and ACSAK will be in place no later than October 6, 2004. Any rates ultimately agreed to or arbitrated will be effective retroactive to April 6, 2004. In light of the pending arbitrations for new interconnection agreements for ACSF and ACSAK, we dismissed our federal district court actions concerning the existing ACSF and ACSAK interconnection agreements on October 14, 2003.

Since 1999, we have also entered into interconnection agreements with Alaska Fiber Star, LLC, TelAlaska Long Distance, Inc., Level 3, and other entities.

Competitive Local Exchange Regulations

The APUC adopted regulations to govern competition in the local exchange marketplace. The transitional regulations provide for, among other things:

•: initial classification of all ILECs, including our rural properties and ACSA, as dominant carriers;
•: requirements that all carriers, both dominant and nondominant, offer all retail services for resale at wholesale rates (although the extent of the offerings depends on the facilities and general service offerings of the carriers);
•: dominant carrier pricing flexibility in competitive areas, under which carriers may reduce retail rates, offer new or repackaged services and implement special contracts for retail service upon 30 days' notice. Only rate increases affecting existing services are subject to full cost support showings for ILECs in areas with local competition; and
•: application of such regulations limited initially to the ACSA market, and in 2002, extended to the ACSF and ACSAK markets.

The RCA had been investigating ACSA's new facilities construction and connection practices, which GCI claims result in disparate treatment for its customers. Certain RCA rulings in this case were appealed to state court in 2002. On December 8, 2003, the court remanded the case to the RCA to determine whether provisions in the FCC's Triennial Review order on new facilities construction preempt its ruling in the case. Based on the parties' joint motion, on January 7, 2004, the RCA vacated that portion of the order requiring our ILECs to modify their line extension tariffs to include GCI customers. On March 15, 2004, the RCA determined that all other pending issues in this proceeding had been resolved and terminated its investigation.

End User Local Rates

The rates charged by our ILECs to end-users for basic local service are generally subject to the RCA's regulation based on a cost-of-service method using an authorized rate of return. Local rates have historically been set at a level that will allow recovery of embedded costs for local service. Competition

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may prevent local rates from being sufficient to recover such costs for local service. Rate cases are typically infrequent, carrier-initiated and require the carrier to meet substantial burdens of proof.

In compliance with an order of the Alaska Public Utilities Commission, the RCA's predecessor, all our ILECs filed revenue requirement studies on July 1, 2001. Based on the RCA's decision, ACSF and ACSN will have revenue requirement reductions, likely leading to rate decreases, while ACSAK and ACSA will have increased revenue requirements, likely leading to rate increases. ACSF, ACSN and ACSAK have filed cost-of-service and rate-design studies and testimony, and have submitted to the RCA a rate settlement jointly stipulated to by all the parties. On February 20, 2004, the RCA convened a hearing to review the proposed rate settlement. A decision is expected before or during the second quarter of 2004. ACSA will file its cost-of-service and rate-design studies and testimony in the second half of 2004. An ACSA rate hearing is scheduled for December 2004. The RCA also granted a waiver petition filed on June 6, 2003, permitting ACSA to file retail-tariff amendments for the Anchorage market on an interim basis as if it were a non-dominant carrier, which may afford ACSA greater pricing flexibility on an experimental basis. At this stage of the proceedings, it is not possible to predict whether the RCA will adopt our proposals.

Intrastate Access Rates

ILECs not yet subject to local competition participate in a pool administered by the Alaska Exchange Carrier Association, or AECA, for intrastate access charges to long distance carriers. The AECA pools their access costs and sets a statewide average price annually which participating ILECs charge to long distance carriers for originating or terminating calls. Access revenues are collected in a pool and then redistributed to the ILECs based on their actual costs.

The RCA requires an ILEC to file separate, individual company access charge tariffs when a competitor enters its service area. These tariffs are based on the ILEC's cost of service and are revised annually. Our only ILEC remaining in the AECA pool as of December 31, 2003 is ACSN. The RCA has approved draft regulations for public comment that propose to change the current annual update process to a biennial review.

The RCA recently issued a spreadsheet model developed by its staff for comment, so that it can analyze the impacts of different methods of recovering access costs. Subsequently, on March 1, 2004, the RCA released draft regulations for public comment that propose to substantially restructure access loop cost recovery. If the RCA's proposed regulations are adopted, interexchange carriers will cease contributing any amount to intrastate loop cost recovery at the conclusion of a five-year transition period. Following the transition period, the RCA's proposed rules require that approximately 60% of the loop cost be allocated to the local jurisdiction with the residual 40% being allocated approximately equally between instate subscriber line charges and support from the Alaska Universal Service Fund. The Company is unable to predict the ultimate outcome of this rulemaking.

Alaska Universal Service Fund

To remove subsidies which had been implicit in intrastate access pricing, the RCA established the Alaska Universal Service Fund, or AUSF. The AUSF serves as a complement to the federal USF, but must meet federal statutory criteria concerning consistency with federal rules and regulations. Currently, the AUSF supports a portion of certain higher cost carriers' switching costs, the costs of lifeline service (which supports rates of low income customers), and a portion of the cost of Public Interest Pay Telephones. Recent proposals have targeted the AUSF as a source of funding for cost shifts that are likely to occur as a result of intrastate access charge reform. The RCA has adopted regulations which limit high-cost switching support to local companies with access lines of 20,000 or less. This change has eliminated the switching support that our rural ILECs received. The resulting cost recovery shift is being addressed in the local service rate cases commenced in 2001. It is unclear the

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degree to which the AUSF might be used to absorb cost shifts that result if federal universal service support is scaled back in the future.

Other State Regulations

The RCA has proposed changes in its rules governing provision of statewide directory assistance, or DA, that would alter the DA market structure, the manner of providing DA service in Alaska and carrier-to-carrier DA obligations. The new rules would make the provision of DA more competitive and permit CLECs to provide DA service. If the rules are adopted, we expect that ACSA may remain the provider of DA service in some areas, at least for some period of time, and that other competitors such as GCI may enter the business. Since the RCA has not yet adopted rules, it is not possible to predict the financial impact of these DA market changes on our ILECs' operating results.

On November 21, 2002, the RCA sought public comment on modifying its competitive local market regulations. Additionally, the RCA initiated a proceeding in June 2003 in response to recently enacted legislation to review its rules governing telecommunications rates, charges between competing telecommunications companies and telecommunications competition. The RCA's review must be guided by certain principles, including that the incumbent carrier must not be placed at an unfair competitive disadvantage and that rates charged to the public must be fair. Additionally, the Alaska state legislature required that the RCA's regulations implement certain policies including that there be fair payment by one carrier for the use of another carrier's equipment and facilities, and that in competitive service areas the ILEC must be subject to the same retail tariffing standards and regulations as the new carrier. The law contains other provisions which promote competitive goals and encourage more businesses to enter and remain as telecommunications carriers in Alaska. The RCA issued proposed regulations in November 2003 which do not appear to substantially modify the existing regulatory structure.

In addition, on March 10, 2004, the RCA issued proposed regulations concerning bundling of local exchange and intrastate interexchange services. The RCA's proposed rules fail to substantially reform existing restrictions.

Environmental Regulations and Radio Emissions

Our operations are subject to federal, state and local laws and regulations governing the use, storage, disposal of, and exposure to hazardous materials, the release of pollutants into the environment and the remediation of contamination. As an owner or operator of property and a generator of hazardous wastes, we could be subject to environmental laws that impose liability for the entire cost of cleanup at contaminated sites, regardless of fault or the lawfulness of the activity that resulted in contamination. We believe, however, that our operations are in substantial compliance with applicable environmental laws and regulations.

Our wireless operations are also subject to regulations and guidelines that impose a variety of operational requirements relating to radio frequency emissions. The potential connection between radio frequency emissions and negative health effects, including some forms of cancer, has been the subject of substantial study by the scientific community in recent years. To date, the results of these studies have been inconclusive. Although we have not been named in any lawsuits alleging damages from radio frequency emissions, it is possible we could be in the future, particularly if scientific studies conclusively determine that radio frequency emissions are harmful.

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MANAGEMENT

The following table sets forth certain information about our current executive officers and directors.

Name	Age	Title
Liane Pelletier	46	Chairman, Chief Executive Officer, President and Director
David Wilson	36	Senior Vice President and Chief Financial Officer
Kenneth L. Sprain	59	Senior Vice President, Operations
Leonard A. Steinberg	50	Vice President, General Counsel, and Corporate Secretary
David C. Eisenberg	43	Senior Vice President, Corporate Strategy and Development
Sheldon Fisher	41	Senior Vice President, Sales and Product Marketing
Kevin P. Hemenway	43	Senior Vice President, Corporate Projects
W. Dexter Paine, III	43	Director
Saul A. Fox	50	Director
John M. Egan	56	Director
Patrick Pichette	41	Director
Byron I. Mallott	60	Director
Wray T. Thorn	32	Director
Brian Rogers	53	Director
Charles P. Sitkin	69	Director

Liane Pelletier has served as Director and as Chief Executive Officer and President since October 6, 2003 and Chairman since January 1, 2004. Prior to this appointment, Ms. Pelletier served as Senior Vice President and Chief Integration Officer at Sprint Corporation from June 2003 through September 2003. In this position, she oversaw Sprint's transformation from a product-centric to a more customer-centric organization. For the three years prior to that appointment, Ms. Pelletier served as Sprint's Senior Vice President of Strategic Planning & Corporate Development. Her responsibilities during that period included driving corporate strategy, managing Sprint's broadband spectrum assets and developing and marketing integrated products. Over the course of her 17-year career at Sprint, Ms. Pelletier also served as a vice president in a wide variety of departments, including in corporate strategy, customer acquisition and retention and marketing positions to both business and consumer customers. Before joining Sprint, she worked as a consultant at Touche Ross and Temple, Barker, Sloane. Ms. Pelletier has an MBA from M.I.T. and a B.A. from Wellesley College.

David Wilson has served as Senior Vice President and Chief Financial Officer since March 1, 2004. Prior to joining us Mr. Wilson was Chief Financial Officer of Triumph Communications, a subsidiary of Hughes Electronics from May 2003 through November 2003. Prior to this, Mr. Wilson was at DIRECTV Broadband (formerly Telocity Inc.) where he was appointed Chief Financial Officer in April 2001, after serving as Vice President of Finance and Chief Accounting Officer from February 2000. At Telocity, he helped lead the company through its initial public offering and eventual sale to Hughes Electronics. Mr. Wilson also worked in public accounting at PricewaterhouseCoopers in both international and domestic offices from 1990 to 2000 where he most recently managed a portfolio of high profile publicly traded network and communications audit clients in San Jose, California. Mr. Wilson is a Chartered Accountant, and holds a Bachelor of Commerce from the University of Birmingham, U.K.

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Kenneth L. Sprain serves as Senior Vice President, Operations. Mr. Sprain is responsible for operations in the local exchange, interexchange, and Internet business units. Mr. Sprain provides us with over 35 years of telecommunications experience. Mr. Sprain joined us in 2003 after being a consultant with us for two years. Prior to this position, from 1997 to 2002, Mr. Sprain was the Vice President of Operations Planning and Vice President of the Midwest Region for CenturyTel, responsible for operations, assignments, and planning. Mr. Sprain started his telecommunications career as a technician, moving to supervisor and district manager positions for RCA Alaska Communications from 1968 to 1979. In 1979, Mr. Sprain became an Anchorage district manager for Alascom. Starting in 1983, Mr. Sprain worked for Pacific Telecom and then PTI as the Vice President for Eastern Washington then Montana Divisions and then Executive Vice President and General Manager for the Midwest. In these executive positions, Mr. Sprain was responsible for local exchange operations.

Leonard A. Steinberg serves as Vice President, General Counsel and Corporate Secretary, a position he has held since January 2001. Mr. Steinberg left private practice in June 2000 to join us as a Senior Attorney in the Corporate Legal Department. From 1998 to 2000, Mr. Steinberg used his expertise in regulatory and administrative matters to represent telecommunications and energy clients of Brena, Bell & Clarkson, P.C., an Anchorage, Alaska law firm. Prior to that, Mr. Steinberg was a partner in the firm of Hoise, Wes, Sacks & Brelsford with offices in Anchorage, Alaska and San Francisco, California. Mr. Steinberg practiced in the firm's Anchorage office from 1996-1998 and in the firm's San Francisco office from 1988-1996 where he primarily represented large clients in oil and gas royalty and tax disputes. Mr. Steinberg holds a Masters in Public Administration degree from Harvard University's Kennedy School of Government, a Masters of Business Administration degree from U.C. Berkeley's Haas School of Business and a J.D. from the University of California's Hastings College of Law.

David C. Eisenberg has served as Senior Vice President, Corporate Strategy and Development, since November 3, 2003. From 2000 until joining ACS, Mr. Eisenberg served as Vice President — Corporate Strategy for Sprint Corporation where he was responsible for helping shape that corporation's strategic direction. From 1996 to 2000, Mr. Eisenberg was Sprint's Director of Strategic Policy Development. In this role he directed analysis of Sprint and competitors strategic positions that emerged from changes to regulatory, political, and economic frameworks. In his 21-year career with Sprint and Centel, Mr. Eisenberg held numerous management positions within the Local Telecommunications Division and on Sprint's corporate staff. These included roles in sales and marketing, finance, and regulatory and strategic planning. Mr. Eisenberg earned his bachelor's degree in mathematics at Northwestern University and his master's degree in business at Keller Graduate School of Management.

Sheldon Fisher has served as Senior Vice President, Sales and Product Marketing since February 23, 2004. Prior to this appointment, Mr. Fisher served as Vice President, Wireless Broadband at Sprint Corporation where he was the general manager of Sprint's wireless broadband business since April 2002, with broad operational and product development responsibilities. Mr. Fisher started with Sprint Corporation in January 1999 as Senior Attorney — Mergers and Acquisitions. In September 1999, he became the Senior Director — Business Development. In September 2000, Mr. Fisher became Assistant Vice President, Architecture and Technology responsible for Sprint's wireless broadband advanced technology group. In September 2001, Mr. Fisher became Assistant Vice President, Network Operations and Technology responsible for management of Sprint's wireless broadband network operations. Prior to joining Sprint, Mr. Fisher worked for Hughes Electronics from 1995 to 1999 and was an attorney for Latham & Watkins from 1990 to 1994. He has a J.D. from Yale Law School and a B.A. in economics from Brigham Young University.

Kevin P. Hemenway currently serves as Senior Vice President, Corporate Projects, a position he has held since March 2004. Prior to being appointed to his current position, Mr. Hemenway had served as Senior Vice President, Chief Financial Officer and Treasurer since November 2000. He joined us as

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Vice President and Treasurer in July 1999. Mr. Hemenway has over 14 years of experience in the telecommunications industry. Before joining us, Mr. Hemenway served as the Chief Financial Officer and Treasurer of Atlantic Tele-Network, Inc. based in the U.S. Virgin Islands. From January 1990 to October 1998, as an independent consultant, Mr. Hemenway performed financial, accounting, management and rate-making consulting services for the telecommunications industry, principally for Atlantic Tele-Network, Inc. and its subsidiaries. From 1986 through 1989, Mr. Hemenway was employed by Deloitte & Touche LLP as a CPA and manager, performing both audit and consulting services, and from 1983 to 1986, was employed by Grant Thornton as a CPA and senior staff accountant. Mr. Hemenway graduated from Creighton University in 1982 with a Bachelor of Science in Business Administration, majoring in accounting, and is a non-practicing CPA certificate holder registered in the State of Nebraska.

W. Dexter Paine, III, a Director since May 1999, was a co-founder of Fox Paine & Company, LLC and has served as President since its inception in 1997. From 1994 until founding Fox Paine, Mr. Paine served as a senior partner of Kohlberg & Co. Prior to joining Kohlberg & Co., Mr. Paine served as a general partner at Robertson Stephens & Company. Mr. Paine has a B.A. in economics from Williams College. Since January 2000, Mr. Paine has served as the Chairman of the Board of Directors of WJ Communications, Inc (Nasdaq — WJCI) and since September 2003 he has served as a director of United National Group, Ltd. (Nasdaq—UNGL).

Saul A. Fox, a Director since May 1999, has served as Chief Executive of Fox Paine & Company, LLC since he co-founded the firm in 1997. Prior to founding Fox Paine & Company, LLC Mr. Fox was general partner with Kohlberg, Kravis Roberts & Co. Prior to joining Kohlberg, Kravis Roberts & Co., Mr. Fox was an attorney specializing in tax, business law and mergers and acquisitions and participated significantly in law firm management at Latham & Watkins LLP, an international law firm headquartered in Los Angeles, California. Mr. Fox received a B.S. in Communications from Temple University in 1975 (summa cum laude) and a J.D. from the University of Pennsylvania School of Law in 1978 (cum laude). Mr. Fox is a director of United National Group, Ltd. (Nasdaq—UNGL) since September 2003 and a member of the Board of Overseers, University of Pennsylvania Law School.

John M. Egan, a Director since November 2003, is the recently retired founder and chairman/CEO of ARRIS Group (Nasdaq: ARRS). ARRIS is a global communications technology company specializing in the design and engineering of broadband local access networks and a leading developer and supplier of optical transmission, cable telephony and Internet access for cable systems operators. Mr. Egan joined ARRIS in 1973 and had been chairman of its board of directors since 1997. Mr. Egan was President of ARRIS from 1980 to 1997 and Chief Executive Officer of ARRIS and its predecessors from 1980 through 1999. On January 1, 2000, Mr. Egan stepped down from his role as Chief Executive Officer of ARRIS. He remained a full-time employee until his retirement in May 2002. Mr. Egan has served on the Board of Directors of the National Cable Television Association, or NCTA, for 20 years, and has been actively involved in the Walter Kaitz Foundation, an association seeking to help the cable industry diversify its management workforce to include minorities, as well as the Society of Cable Television Engineers and Cable Labs, Inc. Mr. Egan currently serves on the advisory board of KB Partners, a Chicago based venture capital firm and on several boards in the technology start-up sector. Mr. Egan has a B.S. degree in Economics from Boston College.

Patrick Pichette, a Director since January 2004, is currently Executive Vice-President at Bell Canada (BCE). Mr. Pichette joined BCE in January 2001 as Executive Vice-President, Planning and Performance Management before being appointed Chief Financial Officer in 2002. Prior to joining BCE, Mr. Pichette was a Partner at McKinsey & Company's Montreal office, from June 1996 to December 2000, where he was a lead member of McKinsey's North American Telecom Practice. Previously, Mr. Pichette was Vice-President and Chief Financial Officer of Call-Net Enterprises (1994-1996) and an Associate at McKinsey & Company in Toronto (1989-1994). Mr. Pichette earned a B.A. Business Administration from Université du Québec à Montréal (1985-1987) and a M.A.

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Philosophy Politics and Economics from Oxford University where he attended as a Rhodes Scholar (1987-1989). Mr. Pichette is also a Board member of Manitoba Telecom Services (MTS) and NGOs including: Engineers Without Borders (EWB) and The Trudeau Foundation.

Byron I. Mallott, a Director since January 2000, is the President and Chief Executive Officer of the First Alaskans Institute. From 1995 until January 2000, Mr. Mallott served as the Executive Director of the Alaska Permanent Fund Corporation. Prior to joining the Alaska Permanent Fund Corporation, Mr. Mallott served in various capacities, including Director, Chairman and President and Chief Executive Officer of Sealaska Corporation over a period of nearly 20 years. Mr. Mallott has also served in various political appointments and elected positions and presently serves on the Boards of Alaska Air Group, Inc. and Native American Bank, N.A.

Wray T. Thorn, a Director since January 2000, has also been a Director with Fox Paine & Company, LLC since January 2000. From 1996 until joining Fox Paine & Company, Mr. Thorn was a Principal and founding member of Dubilier & Company. Prior to joining Dubilier & Company, Mr. Thorn was an Associate in the Acquisition Finance Group of Chase Securities, Inc. Mr. Thorn is a graduate of Harvard University. Since January 2000, Mr. Thorn has served on the Board of Directors of WJ Communications, Inc. (Nasdaq — WJCI).

Brian Rogers, a Director since February 2001, is currently Principal Consultant and Chief Financial Officer for Information Insights, Inc., a management and public policy consulting firm. Mr. Rogers served as Vice President of Finance for the University of Alaska Statewide System from 1988 to 1995. Mr. Rogers is a former state legislator, who served in the Alaska State House of Representatives from 1979 to 1982. Mr. Rogers chaired the State of Alaska Long-Range Planning Commission during 1995 and 1996, and currently, as a Regent of the University of Alaska, serves as the Board Chair and a member of all committees, including the University's Finance and Audit Committee. He holds a Master in Public Administration degree from the Kennedy School of Government, Harvard University.

Charles P. Sitkin, a director since February 2003, is currently an independent consultant assisting enterprises with strategic and organizational planning. Prior to 1994, Mr. Sitkin's experience includes being the National Director of Management Consulting at R.W. Beck & Associates, a Partner and Office Director of Information Technology at Ernst & Young and various leadership positions at the Boeing Company. Mr. Sitkin is a Certified Management Consultant and is a graduate from Lafayette College and the University of Washington.

Committees of the Board

The standing committees of our board of directors will consist of an audit committee, a compensation committee and a nominations and corporate governance committee. We anticipate that each of , and will be appointed to each of the committees listed below upon closing of this offering. Messrs. , and are each independent directors as defined in the rules of the Securities and Exchange Commission and the .

Audit Committee

The principal duties and responsibilities of our audit committee will be as follows:

•: to monitor our financial reporting process and internal control system;
•: to appoint and replace our independent outside auditors from time to time, determine their compensation and other terms of engagement and oversee their work;
•: to oversee the performance of our internal audit function; and
•: to oversee our compliance with legal, ethical and regulatory matters.

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The audit committee will have the power to investigate any matter brought to its attention within the scope of its duties. It will also have the authority to retain counsel and advisors to fulfill its responsibilities and duties.

Compensation Committee

The principal duties and responsibilities of the compensation committee will be as follows:

•: to provide oversight on the development and implementation of the compensation policies, strategies, plans and programs for our key employees and outside directors and disclosure relating to these matters;
•: to review and approve the compensation of our chief executive officer and the other executive officers of us and our subsidiaries; and
•: to provide oversight concerning selection of officers, management succession planning, performance of individual executives and related matters.

Nominations and Corporate Governance Committee

The principal duties and responsibilities of the nominations and corporate governance committee will be as follows:

•: to establish criteria for board and committee membership and recommend to our board of directors proposed nominees for election to the board of directors and for membership on committees of the board of directors;
•: to make recommendations regarding proposals submitted by our shareholders; and
•: to make recommendations to our board of directors regarding corporate governance matters and practices.

Audit Committee Financial Expert

Our Board of Directors has determined that we have at least one audit committee financial expert serving on our audit committee, Patrick Pichette, who is an independent director.

Codes of Conduct and Ethics

We have adopted a code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions. We will provide to any person, free of charge, a copy of such code of ethics. The request must be submitted in writing to the Corporate Secretary, Alaska Communications Systems Group, Inc., 600 Telephone Avenue, Anchorage, Alaska 99503.

Section 16(a) Beneficial Ownership Reporting Compliance

Federal securities laws require executive officers, Directors, and owners of more than ten percent of our common stock to file reports (Forms 3, 4, and 5) with the SEC and any stock exchange or trading system on which our securities are listed, which is currently NASDAQ. These reports relate to the number of shares of our common stock that each own, and any change in their ownership. Based solely on our review of Forms 3, 4 and 5 filed with the SEC and representations of the executive officers and Directors, we believe all persons required to file such forms have done so in a timely manner during 2003, except for Mr. Egan. Mr. Egan was appointed to the Board of Directors on November 19, 2003 and the SEC received his Form 3 on December 8, 2003.

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Summary Compensation Table

The table below sets forth a summary of the compensation we paid our Chief Executive Officer, the four additional most highly compensated executive officers who served in such capacities as of December 31, 2003 and two additional most highly compensated executive officers who served as executive officers during 2003 but left prior to December 31, 2003.

	Annual Compensation								Long Term Compensation
Name and Principal Position	Fiscal Year	Salary		Bonus			Other Annual Compensation(1)		Securities Underlying Stock Options Shares(2)	All Other Compensation
Liane Pelletier Chairman, Chief Executive Officer and President	2003 2002 2001	$	96,154 — —	$	1,400,000 — —	(3)			1,000,000 — —	$	58,124 — —	(4)
Kevin P. Hemenway Senior Vice President, Chief Financial Officer, Treasurer	2003 2002 2001		175,011 175,011 180,405		80,000 — 87,500				— — —		10,400 10,400 10,400	(5)
Kenneth L. Sprain Senior Vice President, Operations	2003 2002 2001		107,308 — —		— — —				— — —		32,793 — —	(5)(6)
David C. Eisenberg Senior Vice President, Corporate Strategy and Developments	2003 2002 2001		28,846 — —		100,000 — —				200,000 — —		21,199 — —	(7)
Leonard A. Steinberg Vice President, General Counsel and Corporate Secretary	2003 2002 2001		175,011 175,011 170,817		85,000 — 80,000				— 50,000 25,000		10,400 10,400 10,400	(5)
Charles E. Robinson Former Chairman and Chief Executive Officer	2003 2002 2001		525,012 500,011 500,011		1,000,000 250,000 500,000		$	125,003	— — —		10,400 10,400 10,400	(5)
Wesley E. Carson Former President and Chief Operating Officer	2003 2002 2001		79,236 200,013 200,013		840,000 — 200,000			30,771	— — —		33,015 124,803 10,400	(8)

(1): Cash-out of accrued paid time off.
(2): Options to purchase shares of common stock.
(3): On October 6, 2003, Ms. Pelletier was granted 200,000 shares of our stock. The market price on that day was $4.50. The shares are fully vested. Ms. Pelletier also received a cash bonus from us in respect of 2003 in the amount of $500,000.
(4): $58,124 for relocation costs.
(5): Annual contribution to the Alaska Electrical Pension Plan, a non-contributory, multi-employer defined contribution plan. Contributions for Messrs. Hemenway, Steinberg and Robinson were $10,400 for 2003. The 2003 contribution for Mr. Carson was $3,694 and was $867 for Mr. Sprain.
(6): $31,926 for relocation costs.
(7): $21,199 for relocation costs.
(8): $29,321 for relocation costs.

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Securities Authorized for Issuance Under Equity Compensation Plans

		Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans not approved by security holders		3,838,938		$	5.32		2,172,476

As of December 31, 2003, the number of securities remaining available for future issuance under equity compensation plans includes 1,630,243 shares under the Alaska Communications Systems Group, Inc. 1999 Stock Incentive Plan, 39,907 shares under the ACS Group, Inc. 1999 Non-Employee Director Stock Compensation Plan, and 502,326 shares under the Alaska Communications Systems Group, Inc. 1999 Employee Stock Purchase Plan. See Note 15 "Stock Incentive Plans" to our audited consolidated financial statements included in this prospectus for further information on our equity compensation plans.

Option Grants in Last Fiscal Year

The table below sets forth information as of December 31, 2003 concerning the issuance of stock options in 2003.

							Potential Realizable Values at Assumed Annual Rates of Stock Price Appreciation for Stock Option Term
		Percentage of Total Stock Options Granted to Employees in Fiscal Year
	Number of Securities Underlying Options Granted
Name				Exercise or Base Price		Expiration Date
Name				Exercise or Base Price		Expiration Date	5%	10%
Liane Pelletier	1,000,000	83.3	%	$	4.50	10/6/2013	2,830,026	7,171,841	(1)
David C. Eisenberg	200,000	16.7	%	$	4.88	11/3/2013	613,801	1,555,493	(1)

(1): Time vesting nonqualified options which vest on each anniversary of the grant date ratably over five years, or on a change in control, whichever is earlier.

Aggregated Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The table below sets forth, on an aggregated basis:

•: information regarding the exercise of options to purchase our common stock by each of the named executive officers listed on the Summary Compensation Table above; and
•: the value on December 31, 2003 of all unexercised options held by such individuals.

				Number of Shares Underlying Unexercised Options at Fiscal Year End		Value of Unexercised In-the-Money Options at Fiscal Year End(1)
	Shares Acquired on Exercise
Name		Value Realized
Name		Value Realized		Exercisable	Unexercisable	Exercisable		Unexercisable
Liane Pelletier	—	$	—	—	1,000,000	$	—	$	240,000
Kevin P. Hemenway	—		—	103,418	56,582		—		—
Kenneth L. Sprain	—		—	—	—		—		—
David C. Eisenberg	—		—	—	200,000		—		—
Leonard Steinberg	—		—	25,556	69,444		—		—
Charles. E. Robinson	—		—	1,248,056	—		—		—
Wesley E. Carson	—		—	264,167	—		—		—

(1): The fair market value of stock options as of December 31, 2003 was assumed to be $4.74 per share, based on the publicly traded value of the security underlying the stock options.

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In addition, there have been stock option grants to executive officers after December 31, 2003. The table below sets forth, on an aggregate basis, the information regarding the exercise of options to purchase our common stock by executive officers as of March 8, 2004 and the value on March 8, 2004 of all unexercised options held by such individuals.

				Number of Shares Underlying Unexercised Options at Fiscal Year End		Value of Unexercised In-the-Money Options at Fiscal Year End(1)
	Shares Acquired on Exercise
Name		Value Realized
Name		Value Realized		Exercisable	Unexercisable	Exercisable		Unexercisable
Liane Pelletier	—	$	—	—	1,000,000	$	—	$	—
Kevin P. Hemenway	—		—	113,834	46,166		—		—
Kenneth L. Sprain(2)	—		—	—	200,000		—		30,000
David C. Eisenberg	—		—	—	200,000		—		—
Leonard Steinberg(3)	—		—	34,028	65,972		—		750
Charles. E. Robinson	—		—	1,248,056	—		—		—
Wesley E. Carson	—		—	264,167	—		—		—
Sheldon Fisher(4)	—		—	—	200,000		—		30,000
David Wilson(5)	—		—	—	250,000		—		15,000

(1): The value of in-the-money stock options was determined using a $4.50 per share price, based on the publicly traded value of the security underlying the stock options on March 8, 2004.
(2): Mr. Sprain received 200,000 options on February 1, 2004 having a term of 10 years with an exercise price of $4.35, which was the fair market value of the stock on that day based on the closing market price. Options vest at 20% or 40,000 shares per twelve-month period for the five-year period starting on February 1, 2004 or on a change in control, whichever is earlier.
(3): Mr. Steinberg received 5,000 options on February 1, 2004 having a term of 10 years with an exercise price of $4.35, which was the fair market value of the stock on that day based on the closing market price. Options vest at 20% or 1,000 shares per twelve-month period for the five-year period starting on February 1, 2004 or on a change in control, whichever is earlier.
(4): Mr. Fisher received 200,000 options on February 23, 2004 having a term of 10 years with an exercise price of $4.35, which was the fair market value of the stock on that day based on the closing market price. Options vest at 20% or 40,000 shares per twelve-month period for the five-year period starting on February 1, 2004 or on a change in control, whichever is earlier.
(5): Mr. Wilson received 250,000 options on March 1, 2004 having a term of 10 years with an exercise price of $4.44, which was the fair market value of the stock on that day based on the closing market price. Options vest at 20% or 50,000 shares per twelve-month period for the five-year period starting on February 1, 2004 or on a change in control, whichever is earlier.

Pension Plans

Our eligible employees, including executive officers, participate in the Alaska Electrical Pension Plan, or the AEP Plan, a non-contributory, multi-employer defined contribution retirement plan administered by a board of trustees representing the member employers. We make contributions on employees' behalves in accordance with schedules based on wage rates and job classifications. Participants receive a monthly benefit upon retirement, payable for life based on the contributions made on the employee's behalf. Actuarially equivalent alternative forms of benefits are also available at the participant's election. Participants are entitled to receive full benefits upon retirement at or after age 58 with at least five years of recognized service, at least one of which must be "future credited service" as defined in the AEP Plan document. Participants may elect to receive reduced benefits upon

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early retirement on or after age 48 and at least five years of recognized service, of which at least three years must be future credited service.

Estimated annual benefits upon retirement at normal retirement age for each of the named executive officers is as follows:

Name	Normal Retirement Benefit
Liane Pelletier	$	13,416
Kevin P. Hemenway		39,624
Kenneth L. Sprain		6,348
Leonard A. Steinberg		22,980
David C. Eisenberg		28,704
Charles E. Robinson		20,328
Wesley E. Carson		9,984

We maintain a separate executive post retirement health benefit plan. We adopted the Alaska Communications Systems Executive Retiree Health Benefit Plan, or the ACS Health Plan, in November 2001 and amended it in October 2002. The ACS Health Plan covers a select group of management or highly compensated employees. To be eligible for selection to participate, an employee must complete ten years of service and be employed by us in the capacity of an executive officer for a minimum of 36 consecutive months immediately preceding retirement. The ACS Health Plan provides a graded subsidy for medical, dental, and vision coverage. The Compensation Committee of the Board of Directors decided to terminate the ACS Health Plan in January 2004. Mr. Robinson, Mr. Carson and another employee, already qualified for benefits under the plan prior to its termination and will receive future benefits. The plan is closed to future participants. Estimated annual benefits upon retirement at normal retirement age for Mr. Robinson and Mr. Carson are $9,000 and $7,200, respectively.

We also have the Alaska Communications Systems Retirement Plan, or the ACS Plan, a defined benefit plan which we sponsor and was created in 1999 to receive assets and liabilities for employees that participated in the CenturyTel Retirement Plan prior to our acquisition of CenturyTel's Alaska properties on May 14, 1999. Effective November 1, 2000, we granted an additional "special past service benefit" to eligible employees with qualifying past service, as defined in the ACS Plan document. All other retirement benefits, delivered in accordance with the ACS Plan provisions, are frozen as of May 14, 1999, and the ACS Plan does not accrue additional benefits on behalf of any of its participants. None of the current named executive officers participates in the ACS plan. Mr. Carson is already receiving annual benefits under the ACS plan of approximately $24,851.

Compensation of Directors

We compensate our non-employee Directors for serving on the Board of Directors. In 2003, each non-employee Director received an annual retainer fee of $28,000 plus an additional $1,500 for each Board of Directors and/or committee meeting attended. Directors received their annual retainer and meeting fees entirely in cash, and had the option to elect to defer receipt of the cash fees.

In 2004, each non-employee Director will receive an annual retainer fee of $30,000. Directors are required to receive not less than 50% of their annual retainer in the form of our stock, and may elect to receive up to 100% of their annual retainer in the form of stock. A Director may also choose to defer receipt of such stock. In addition, Directors will be paid $1,500 for each Board of Directors and/or committee meeting attended in person, except for audit committee meetings. The audit committee chair will be paid $3,000 and the other committee members will be paid $2,500 for each audit committee meeting attended in person. Directors will also be paid $750 for each Board of Directors and/or committee meeting attended by phone. The stock based compensation component of

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Directors' compensation is provided under the Alaska Communications Systems Group, Inc. 1999 Non-Employee Director Stock Compensation Plan.

Employment Contracts, Termination of Employment and Change in Control Arrangements

We entered into employment agreements with Ms. Pelletier and Messrs. Hemenway, Sprain, Eisenberg, Steinberg, Wilson and Fisher. These arrangements are summarized below.

Employment Agreement with Liane Pelletier. We entered into an employment agreement with Liane Pelletier, as of September 14, 2003, pursuant to which Ms. Pelletier serves as our President and Chief Executive Officer beginning on October 6, 2003. Ms. Pelletier was also elected to our Board of Directors as well as to the Executive Committee of the Board beginning on October 6, 2003. Ms. Pelletier has served as the Chairman of the Board of Directors since January 1, 2004. The employment agreement expires on October 6, 2008.

Ms. Pelletier will receive an annual base salary of $500,000. Ms. Pelletier will be eligible to receive a target annual bonus of $500,000 based on achieving 100% of targeted performance objectives. Subject to the terms of the applicable annual bonus plan, the actual bonus paid for any fiscal year will range from $200,000 to 200% of base salary based on the achievement of performance objectives determined by the Board (or a designated committee of the Board) in consultation with Ms. Pelletier for each fiscal year. Ms. Pelletier will have the option to receive up to 50% of her annual bonus in our stock based on the fair market value on the date of bonus determination. Ms. Pelletier's employment agreement also provides for other customary benefits including eligibility to participate in fringe benefit plans, paid vacation, life and disability insurance plans and expense reimbursement.

Ms. Pelletier received a cash signing bonus of $500,000 and 200,000 shares of our stock. $350,000 of the cash signing bonus was paid on October 7, 2003 and the remaining $150,000 of the cash signing bonus was paid on January 1, 2004. Ms. Pelletier was granted 200,000 shares of our stock on October 6, 2003. We also reimbursed Ms. Pelletier $58,124 for all reasonable and documented relocation and moving expenses from Kansas City to the Anchorage area incurred in accordance with our executive relocation policy; and Ms. Pelletier will receive reasonable temporary housing costs until July 1, 2004. We will "gross up" the reimbursement to Ms. Pelletier for any tax liability incurred with respect to such reimbursement of relocation expenses.

On October 6, 2003, Ms. Pelletier was granted an option to purchase 1,000,000 shares of our stock, with an exercise price equal to the fair market value of our stock on that date. The option has a term of 10 years, and vests 20% per year, or upon a change of control, if earlier. Except as provided below, vesting ceases and the term of unvested options lapse upon termination of employment for any reason.

In the event we terminate Ms. Pelletier's employment for any reason other than a Board determination of cause or a termination for death or disability, or if Ms. Pelletier terminates her employment because of a constructive termination, Ms. Pelletier shall be entitled to receive the following severance benefits from us:

(i): $1,000,000 if the termination occurs on or before December 31, 2004;
(ii): $750,000 if the termination occurs after December 31, 2004 and on or before December 31, 2005; or
(iii): $500,000 if the termination occurs after December 31, 2005 and on or before October 6, 2008.

The severance amount would be paid to Ms. Pelletier in periodic installments equal to the periodic base salary payments Ms. Pelletier was otherwise receiving from us prior to the termination until the full severance amount is paid. In addition, Ms. Pelletier would

•: receive any unpaid bonus from the previously completed fiscal year, payable when bonuses are paid to our other senior executives for such fiscal year;

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•: receive a pro rata bonus (of the amount actually earned) for the year of termination, payable when bonuses are paid to our other senior executives for such year;
•: become fully vested in the next 200,000 unvested option shares;
•: receive COBRA health insurance coverage reimbursed for herself and her eligible dependents for the 18 month period following such termination; and
•: be fully reimbursed (including any tax gross-up) for the costs of relocation back to the continental United States if such relocation takes place within 12 months of the date of termination.

Employment Agreement with David C. Eisenberg. We entered into an employment agreement with David C. Eisenberg, effective October 31, 2003, pursuant to which Mr. Eisenberg serves as Senior Vice President, Corporate Strategy and Development for us for a five-year period, which will be extended automatically for successive additional one-year periods unless either we or Mr. Eisenberg gives no less than 90 days written notice of an intention not to extend the term. Mr. Eisenberg will receive an annual base salary of $250,000 during the first year of the employment period, subject to annual review in each year of the employment period thereafter. Mr. Eisenberg's annual base salary may be increased in years following the first year of employment but may not be decreased. In addition, Mr. Eisenberg will be eligible to receive an annual bonus equal to 100% of his annual base salary based on the attainment of appropriate business targets for each fiscal year, with appropriate adjustments in the event that we exceed or do not attain the business targets. Mr. Eisenberg's employment agreement also provides for other customary benefits including eligibility to participate in fringe benefit plans, paid vacation, life and disability insurance plans and expense reimbursement.

Mr. Eisenberg received a hiring bonus of $100,000. In the event Mr. Eisenberg voluntarily terminates his employment with us within his first year of employment, he will be required to repay a pro-rated amount of the hiring bonus. Mr. Eisenberg received an option to purchase 200,000 shares of our stock with an exercise price equal to the fair market value of our stock on the commencement date of his employment. The option has a term of 10 years, and vests 20% per year for the five-year period starting with the commencement of his employment with us, or upon a change in control, if earlier. Except as provided below, vesting ceases and the term of unvested options lapse upon termination of employment for any reason.

Under Mr. Eisenberg's employment agreement, if Mr. Eisenberg's employment were to be terminated by Mr. Eisenberg because of a constructive termination or following a change in control, or by us without cause, or if we decided at any time not to extend the term of his employment agreement, we would be obligated to pay Mr. Eisenberg a lump sum cash payment in an amount equal to the sum of:

•: Mr. Eisenberg's annual base salary, as then in effect, plus
•: Mr. Eisenberg's target annual bonus amount, as well as reimbursement for the cost of continuing health insurance coverage under COBRA for 18 months.

We would also be obligated to provide reimbursement for the cost of personal travel for Mr. Eisenberg, his spouse and dependent family members and transport of household belongings, to a maximum of $50,000, if Mr. Eisenberg or, in the event of his death, his spouse or dependent family members, elect to relocate to the continental United States within three months of such termination.

Other Employment Agreements. We entered into employment agreements with Kevin P. Hemenway, Senior Vice President, Corporate Projects and Leonard A. Steinberg, Vice President, General Counsel and Corporate Secretary, effective May 3, 2001. Mr. Steinberg's employment agreement was subsequently amended on February 1, 2004. We entered into an employment agreement with Kenneth L. Sprain, Senior Vice President, Operations effective May 12, 2003, which was subsequently amended on February 1, 2004. We entered into an employment agreement with Sheldon

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Fisher, Senior Vice President, Sales and Product Marketing on January 23, 2004 and with David Wilson, Senior Vice President and Chief Financial Officer on February 18, 2004.

The employment agreements for Messrs. Wilson and Fisher are similar to Mr. Eisenberg's agreement. The respective agreements provide for an annual base salary of $250,000 for each of Messrs. Wilson and Fisher, target annual bonuses of 100% of base salary and the grant of 250,000 stock options for Mr. Wilson and 200,000 stock options for Mr. Fisher. Mr. Fisher received a $100,000 hiring bonus and Mr. Wilson received a $75,000 hiring bonus. Mr. Fisher must return a pro-rata portion of the bonus if he voluntarily terminates employment within the first year of his employment and Mr. Wilson will receive his hiring bonus on June 30, 2004, provided that he remains employed with us on that date.

The employment agreements for Messrs. Hemenway, Steinberg and Sprain are similar to Mr. Eisenberg's employment agreement, except that these agreements have two-year terms, do not provide for the grant of stock options, a hiring bonus or the post-termination relocation provision in Mr. Eisenberg's agreement. Under the respective agreements, Mr. Hemenway has an annual base salary of $175,000 with a target annual bonus of 50% of base salary, Mr. Sprain has an annual base salary of $180,000 with a target annual bonus of 100% of salary and Mr. Steinberg has an annual base salary of $175,000 with a target annual bonus of 100% of base salary.

Retirement Agreement with Charles E. Robinson. Under the retirement agreement by and between Alaska Communications Systems Group, Inc. and Charles E. Robinson, dated as of September 14, 2003, Mr. Robinson retired as our President and Chief Executive Officer on October 6, 2003. Mr. Robinson remained on our Board of Directors as Chairman of the Board of Directors until December 31, 2003, at which time he ceased to be a member of our Board and the board of any of our affiliates. Under the retirement agreement, Mr. Robinson received or is eligible to receive the following benefits:

•: Continued base salary through December 31, 2003;
•: A lump sum amount equal to $1,000,000 on October 6, 2003;
•: A 2003 annual bonus (as determined by the Board of Directors) when the 2003 annual bonuses are paid to our other senior executives, in an amount not less than $250,000;
•: An additional bonus payment of $250,000 tied to successful disentanglement from the State of Alaska contract;
•: Reimbursement for the cost of continuing health insurance coverage under COBRA for the 18 month period following October 6, 2003; and
•: In the event Mr. Robinson relocates to the continental United States during the 12 months following December 31, 2003, Mr. Robinson shall be entitled to receive relocation benefits in accordance with the executive relocation benefits policy.

In addition, we repurchased 266,788 shares of our common stock at a repurchase price per share equal to $4.73, the highest average closing price of our common stock during any 5-consecutive day trading period in January 2004. Mr. Robinson will deliver such shares to us in 2004, and we will make the repurchase payments totaling $1,261,907 to him in four equal quarterly installments commencing on March 31, 2004.

Description of Stock Option Plans and Employee Benefit Plans

Certain of our directors and executive officers hold options to purchase our existing common stock. As of March 5, 2004, all of our directors and executive officers held options to purchase an aggregate of 3,622,223 shares of our existing common stock under our existing equity incentive plans with a weighted-average exercise price per share of $5.61.

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Except as described below with respect to our equity plans, all of our employee benefit and welfare plans, such as medical plans and pension plans, are expected to continue substantially unchanged and benefits under these plans are not expected to be substantially affected by the Transactions. Prior to closing of this offering, we intend to establish long-term incentive plans to replace our two existing equity incentive plans. However, we reserve the right to modify any employee benefit or welfare plan.

Our 1999 Employee Stock Purchase Plan (the "ESPP") permits our eligible employees to credit payroll deductions, to a maximum of 15% of their base compensation, toward the purchase of our shares under the ESPP. Payroll deductions are used to purchase shares of our common stock under the ESPP at 85% of the lesser of the fair market value of our common stock on the first day of the six-month offering period or the last day of such offering period. Six month offering periods commence on each January 1^st and July 1^st. The offering period that is in effect prior to the occurrence of the reclassification will be terminated in advance of the reclassification and accumulated payroll deductions will be used to purchase shares at the time the offering is terminated. Thereafter, our ESPP will be terminated.

We currently have in place stock-based compensation plans, including an employee stock option plan, a non-employee director stock compensation plan and an employee stock purchase plan. We expect to terminate all of these stock-based compensation plans upon the completion of the Transactions. We intend to replace the stock-based compensation plans with a long-term incentive plan, or LTIP, and have engaged an outside compensation consulting firm to make recommendations to the compensation committee of our board of directors regarding LTIP structures.

Our board of directors is considering various alternatives to fairly compensate our employees for the termination of the existing stock-based compensation plans. Any plan adopted by our board of directors is likely to result in compensation expense upon consummation of the Transactions.

Compensation and Personnel Committee Interlocks and Insider Participation

As described below, the members of the Compensation and Personnel Committee of the Board of Directors determined the compensation for our executive officers. The members of the Compensation and Personnel Committee in 2003 were Mr. Charles E. Robinson and Mr. W. Dexter Paine, III. Since January 2004, the members of the Compensation and Personnel Committee have been Mr. W. Dexter Paine, III, Mr. Brian Rogers, and Mr. John Egan. Mr. Robinson was the only member of the Compensation and Personnel Committee who was an officer of ours. Mr. Paine is the President of Fox Paine & Company, LLC. Fox Paine & Company, LLC receives an annual management fee in the amount of 1% of our net income before interest expense, income taxes and depreciation and amortization, calculated without regard to the fee. This fee for 2003, 2002 and 2001 was $947,273, $1,299,808 and $1,299,606 respectively. The fee is paid not later than March 31 of the year following the year for which it was earned. The board of directors has also approved the payment of a fee equal to 1% of the gross proceeds generated from the sale of our directories business, plus expenses in connection with such transaction, including the reimbursement by us of a $250,000 consulting fee and transaction bonus paid to Mr. Robinson. We paid Fox Paine & Company a fee of $2,095,000 on May 8, 2003. The board of directors also approved the payment of a fee equal to 1% of the gross proceeds generated from the refinancing of our debt. We paid Fox Paine & Company $3,759,703 on August 28, 2003. Mr. Robinson also received certain payments from us as set forth above related to his retirement agreement.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Fox Paine receives an annual management fee in the amount of 1% of our net income before interest expense, income taxes and depreciation and amortization, calculated without regard to the fee. This fee for 2001, 2002 and 2003 was $1,299,606, $1,299,808 and $947,273 respectively. The fee is paid not later than March 31 of the year following that for which it was earned. We have agreed to pay Fox Paine a transaction advisory fee equal to $ million in connection with their advice and assistance in structuring and effecting the Transactions and to terminate our management services agreement with Fox Paine. As a result, after this offering, we will no longer pay this management fee.

The members of our board of directors that are not affiliated with Fox Paine have approved our payment to Fox Paine of the transaction advisory fee referred to above and our entry into the registration rights agreement with Fox Paine. See "— Registration Rights." In addition, the board of directors has received an opinion of its financial advisor, , that the proposed transaction advisory fee for services provided in connection with the Transactions and the termination of our management services agreement with Fox Paine to be paid to Fox Paine is fair, from a financial point of view, to the holders of our existing common stock (other than Fox Paine).

Messrs. Saul A. Fox and W. Dexter Paine, III are co-founders, Chief Executive Officer and President, respectively, and Mr. Wray T. Thorn is a Director of, Fox Paine. Each of Messrs. Fox, Paine and Thorn are members of our board of directors.

Our board of directors also approved the payment to Fox Paine of a fee equal to 1% of the gross proceeds generated from the sale of our Directories Business, plus expenses in connection with such transaction, including the reimbursement by us of the $250,000 consulting fee and transaction bonus paid to Mr. Robinson under the agreement described below. We paid Fox Paine $2,095,000 on May 8, 2003.

Fox Paine entered into a consulting agreement with Mr. Robinson for services rendered for our benefit related to the sale of our Directories Business. Under this agreement, Mr. Robinson received a lump-sum consulting fee and transaction bonus of $250,000 in May 2003. As described above, Fox Paine was reimbursed for this expense.

Our board of directors approved the payment of a fee to Fox Paine equal to 1% of the funded capital raised through the ACSH senior notes offering and the closing of our existing credit facilities, plus expenses in connection with such transactions. On August 28, 2003, we paid to Fox Paine $3,759,703 for this fee, excluding expenses.

On April 17, 2001, we made an interest bearing loan to Mr. Carson totaling $328,000 to facilitate payment by Mr. Carson of taxes on the income deemed received in connection with the exercise of options by Mr. Carson. The note evidencing the loan bore interest at the Mid-Term Applicable Federal Rate and was due on April 15, 2005. The note was secured by a pledge of 100,000 shares of our stock held in Mr. Carson's name. The largest aggregate amount outstanding during 2003 was $237,983. Pursuant to Mr. Carson's employment agreement, the indebtedness was subject to forgiveness over a three-year period or in the event of termination of the employment agreement for specified reasons. Mr. Carson waived certain rights under his employment agreement upon completing the sale of our Directories Business, for which he received a fee of $840,000. Included in these waived rights, valued in total at approximately $700,000, Mr. Carson waived the forgiveness terms of this indebtedness that would have occurred during 2003 and 2004. On May 8, 2003, Mr. Carson paid off the note balance of $237,983 in cash, including accrued interest.

During 2003, we spun off our Directory Business to ACS Media, LLC and subsequently sold 99.9% of our interest in ACS Media LLC to the public through a Canadian income fund. As part of that transaction, we entered into several long-term contracts with ACS Media LLC, including a 50-year publishing agreement, a 50-year license agreement, a 45-year non-compete agreement and a 10-year

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billing and collection agreement. At December 31, 2003, we had recorded in accounts payable — affiliates $2,867 due to ACS Media, LLC under these contracts, primarily under the billing and collection agreement. We have a right to minority representation of one manager of the permitted nine managers of ACS Media LLC so long as our long-term contracts with ACS Media LLC are in effect. Currently, Wray T. Thorn, a director of ours and an employee of Fox Paine, our majority shareholder, is a manager of ACS Media LLC.

On September 14, 2003, we entered into an agreement with Mr. Robinson to reacquire 266,788 shares of our stock owned by Mr. Robinson in January 2004 at a purchase price per share equal to the highest average closing price of a share of our stock during any consecutive five-day trading period in January 2004. Mr. Robinson delivered the shares to us in 2004, and we will make the repurchase payments totaling $1,261,907 to Mr. Robinson in four equal quarterly installments commencing on March 31, 2004. Under SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, the obligation was initially measured at fair value. If the obligation had been settled on December 31, 2003, we would have paid $1,264,575 for those shares. As a result as of December 31, 2003, $1,264,575 was included in Accounts payable — affiliates on our consolidated balance sheets. As of December 31, 2003, we have classified the 266,788 shares as shares subject to mandatory redemption within stockholders equity on our consolidated balance sheets.

On September 19, 2003, Fox Paine entered into a consulting agreement with Mr. Robinson. The consulting term will begin on January 1, 2004 and continue for one year, after which either party may terminate the arrangement. During the consulting term, Mr. Robinson will advise Fox Paine on and evaluate potential opportunities in the telecommunications industry, and Fox Paine will pay the former officer a monthly fee of $20,000 for these services.

Registration Rights

Upon closing of this offering, we will enter into a registration rights agreement with Fox Paine pursuant to which Fox Paine:

•: will have four demand registration rights relating to the shares of Class B common stock and IDSs (and shares of Class A common stock and notes upon a separation of the IDSs) held by it, subject to the requirement that the securities, including any piggyback securities, covered by each demand registration have an aggregate public offering price of at least $ million; provided, however, that Fox Paine may exercise a demand right for less than an aggregate public offering price of $ million if such proposed offering is for all of the remaining IDSs held by it; and
•: will have an unlimited number of piggyback registration rights relating to the shares of Class B common stock and IDSs (and shares of Class A common stock and notes upon a separation of the IDSs) held by it.

If Fox Paine exercises its demand registration rights, we will file a registration statement or prospectus and undertake an offering in the United States, as requested by Fox Paine. These registration rights will be transferable by Fox Paine to certain permitted transferees.

We have agreed to pay all costs and expenses in connection with each such registration, except underwriting discounts and commissions applicable to the securities sold, and to indemnify Fox Paine and permitted transferees against certain liabilities, including liabilities under the Securities Act of 1933.

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PRINCIPAL STOCKHOLDERS

The following table provides information regarding beneficial ownership of our outstanding common stock as of March 5, 2004 and the beneficial ownership of our outstanding common stock following the Transactions by:

•: each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock;
•: each of our directors;
•: each of our named executive officers; and
•: all of our executive officers and directors as a group.

Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act. Each person has sole voting and investment power with respect to the shares indicated except as otherwise stated in the footnotes to the table.

					Beneficial Ownership After the Transactions(10)
									Beneficial Ownership of Voting Stock After the Transactions(10)(11)
	Beneficial Ownership Prior to the Transactions
					Class A		Class B
Name and Address of Beneficial Owner					Class A		Class B
Name and Address of Beneficial Owner	Number		Percentage		Number	Percentage	Number	Percentage	Percentage
Fox Paine Capital, LLC	19,498,879	(1)	66.48	%
c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 501 Foster City, CA 94404
Fox Paine & Company, LLC	16,492,802	(1)	56.23	%
950 Tower Lane, Suite 501 Foster City, CA 94404
Fox Paine Capital Fund, L.P.	16,251,658	(1)	55.41	%
c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 501 Foster City, CA 94404
Franklin Resources, Inc.	2,489,112	(2)	8.49	%
One Franklin Parkway San Mateo, CA 94403
Franklin Advisers, Inc.	2,402,900	(2)	8.19	%
One Franklin Parkway San Mateo, CA 94403
Cook Inlet Region, Inc.	1,624,907		5.54	%
2525 C Street, Suite 500 Anchorage, AK 99503

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					Beneficial Ownership After the Transactions(10)
									Beneficial Ownership of Voting Stock After the Transactions(10)(11)
	Beneficial Ownership Prior to the Transactions
					Class A		Class B
Name and address of beneficial owner					Class A		Class B
Name and address of beneficial owner	Number		Percentage		Number	Percentage	Number	Percentage	Percentage
Directors:
Liane Pelletier	200,000		*
Saul A. Fox	19,616,512	(3)	66.89	%
W. Dexter Paine, III	19,598,879	(3)	66.83	%
Wray T. Thorn	19,598,879	(3)	66.83	%
Byron I. Mallott	11,725		*
Brian Rogers	1,000		*
Charles P. Sitkin	—		*
John M. Egan	—		*
Patrick Pichette	—		*
Non-Director Executive Officers:
Kevin P. Hemenway(4)	134,833		*
Kenneth L. Sprain	1,167		*
David C. Eisenberg	—		*
Leonard A. Steinberg(5)	36,013		*
Charles E. Robinson(6)(7)	1,577,318		5.16	%
Wesley E. Carson(8)(9)	452,167		1.52	%
All directors and executive officers as a group (15 persons)	22,030,735	(3)	71.09	%

*: The percentage of shares beneficially owned does not exceed 1% of the class.
(1): Fox Paine Capital, LLC is General Partner of Fox Paine Capital Fund, L.P. and FPC Investors, L.P., and the Managing Member of ALEC Coinvestment Fund I, LLC, ALEC Coinvestment Fund II, LLC, ALEC Coinvestment Fund III, LLC, ALEC Coinvestment IV, LLC, and ALEC Coinvestment Fund V, LLC, and possesses voting and investment power over all shares held by each of these entities. Fox Paine & Company, LLC is the manager of Fox Paine Capital Fund, L.P. and FPC Investors, L.P. Fox Paine & Company, LLC is not the record owner of any shares of our common stock.
(2): Franklin Advisers, Inc. and Franklin Private Client Group, Inc. are investment advisory subsidiaries of Franklin Resources, Inc. Franklin Resources, Inc. is not the record owner of any shares of our common stock and does not possess power to vote or dispose of any shares of our common stock. Amounts listed are as of December 31, 2003.
(3): Mr. Fox and Mr. Paine are members of Fox Paine Capital, LLC and share voting power of Fox Paine Capital, LLC. Mr. Thorn is a Director of Fox Paine Capital, LLC. In addition, Mr. Fox and Mr. Paine are the managing members of Bucks Capital, LLC and Mr. Thorn is a member of Bucks Capital, LLC. Bucks Capital, LLC is an investment vehicle created for the purposes of allowing selected members of Fox Paine & Company, LLC to invest primarily in selected portfolio companies in which investment funds managed by Fox Paine & Company, LLC invest. None of the shares shown as beneficially owned by Mr. Fox, Mr. Paine and Mr. Thorn are owned of record by these individuals. Mr. Fox, Mr. Paine and Mr. Thorn each disclaim beneficial ownership of the shares owned by Bucks Capital, LLC or the entities of which Fox Paine Capital, LLC is General Partner or Managing Member, except to the extent of their respective pecuniary interest therein.
(4): Mr. Hemenway owns 20,999 shares and can acquire 113,834 shares within 60 days.
(5): Mr. Steinberg owns 1,985 shares and can acquire 34,028 shares within 60 days.

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(6): Mr. Robinson retired as Chairman of our board of directors on December 31, 2003. On October 6, 2003, Mr. Robinson retired as our Chief Executive Officer.
(7): Mr. Robinson owns 329,262 shares and can acquire 1,248,056 shares within 60 days.
(8): In connection with the company's recent disposition of a controlling interest in its Directories Business on May 8, 2003, our then president and chief operating officer, Wesley E. Carson, departed to run the Directories Business, and is no longer employed by us.
(9): Mr. Carson owns 188,000 shares and can acquire 264,167 shares within 60 days.
(10): Amounts of Class A common stock and Class B common stock reflect the occurence of the automatic exchange of the shares of Class B common stock received for IDSs in the reclassification for IDSs, assuming that the underwriters do not exercise their overallotment option and that all shares of Class B common stock in excess of 10% of the total value of our equity capitalization are exchanged into IDSs on the 12^th day after the completion of the reclassification. See "Description of Capital Stock—Class B Common Stock." See "Summary—The Transactions" for a description of the reclassification.
(11): Shares of Class A common stock and Class B common stock are each entitled to one vote per share.

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DESCRIPTION OF OTHER INDEBTEDNESS

New Revolving Credit Facility

Concurrently with the closing of this offering, ACSH will enter into a new senior revolving credit facility with various financial institutions. ACSH has received commitments from JPMorgan Chase Bank, an affiliate of J.P. Morgan Securities Inc.; CIBC World Markets Corp.; Citicorp North America, Inc., an affiliate of Citigroup Global Markets Inc.; Bank of America N.A., an affiliate of Banc of America Securities LLC; and Royal Bank of Canada, an affiliate of RBC Capital Markets Corporation to provide a $50 million senior secured credit facility on specified terms and conditions. This new revolving credit facility is expected to make $50.0 million available to us on a revolving basis for five years. The following is a summary description of the material contemplated terms of the new revolving credit facility and is subject to and qualified in its entirety by reference to the new revolving credit facility, which has been filed as an exhibit to the registration statement of which this prospectus is a part.

Security; Guarantees

Obligations under the new revolving credit facility will be unconditionally and irrevocably guaranteed, jointly and severally, by us and by each of our other existing and subsequently acquired or organized domestic subsidiaries, other than ACS Media Holdings LLC. In addition, the new revolving credit facility and the related guarantees will be secured by collateral that includes substantially all of our assets, and the assets of our domestic subsidiaries, other than ACS Media Holdings LLC, including a first-priority pledge:

•: by us of all of our capital stock in ACSH;
•: to the extent not prohibited by law or any existing contract, by ACSH of the capital stock of companies in which it holds a minority stake;
•: by ACSH of all of the capital stock of all its domestic subsidiaries and, under limited circumstances, some of its foreign subsidiaries, which pledge, in the case of any foreign subsidiary, will, except in limited circumstances, be limited to 65% of the capital stock of the foreign subsidiary; and
•: of, and mortgage on, substantially all of the tangible and intangible assets of us, ACSH and the other guarantors, including accounts receivable, documents, inventory, equipment, intellectual property, investment property, general intangibles, real property, cash and cash accounts, and proceeds of the foregoing, in each case subject to limited exceptions.

Our new revolving credit facility will provide for the release of guarantees under limited circumstances.

Availability

The availability of our new revolving credit facility will be subject to various conditions precedent typical of bank loans including, among other things, the absence of any material adverse change in our business. Amounts repaid under our new revolving credit facility are available for reborrowing on a revolving basis, subject to the terms of such facility. Proceeds from borrowings (other than swing line borrowings) under the new revolving credit facility will be available for general corporate purposes, including to fund dividend payments on the IDSs; provided, that, after giving pro forma effect to each such dividend payment, at least $10 million remains available to be drawn under the new revolving credit facility.

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Interest and Maturity

It is expected that our new revolving credit facility will be a five-year facility, and any outstanding balances incurred thereunder would bear interest at an annual rate equal to, at ACSH's option, an adjusted London interbank offer rate, or LIBOR, plus 3.00%, or an alternative base rate plus a 2.0% margin.

Amounts under the new revolving credit facility not paid when due will bear interest at a default rate equal to 2.00% above the otherwise applicable rate.

Prepayments

Our new revolving credit facility will permit us to prepay loans and to permanently reduce revolving credit commitments, in whole or in part, at any time in a minimum principal amount to be agreed upon.

Fees

We will be required to pay the lenders, on a quarterly basis, a commitment fee equal to 0.50% annually on the undrawn portion of the unused commitments. We will also be required to pay:

•: on a quarterly basis, a letter of credit fee on the face amount of all outstanding letters of credit equal to the applicable margin then in effect for adjusted LIBOR loans under the revolving credit facility;
•: on a quarterly basis, a fronting fee in an amount to be agreed to on each letter of credit to the issuing bank;
•: standard fees of the issuing bank with respect to issuance, amendment, renewal, or extension of any letters of credit; and
•: administrative agent fees.

Limitations on Distributions

The revolving credit facility is expected to prohibit ACSH from making any distribution to us:

•: if a default or event of default under the new revolving credit facility has occurred and is continuing, after giving pro forma effect to such distribution, or
•: if ACSH does not have at least $10 million undrawn under the new revolving credit facility, after giving pro forma effect to such distribution;

provided, however, that ACSH will not be prohibited from making any distribution to us if there are no outstanding loans and no letters of credit issued under the new revolving credit facility, other than letters of credit that are fully cash collateralized, after giving pro forma effect to such distribution.

Covenants; Events of Default

The new revolving credit facility will contain customary covenants that, among other things, will restrict our ability to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay other indebtedness or amend other debt instruments, pay dividends, create liens on assets, enter into sale-and-leaseback transactions, make acquisitions, engage in mergers or consolidations, change our business, make capital expenditures, engage in transactions with affiliates, or make investments, loans or advances. The new revolving credit facility will require us to comply with a minimum interest-coverage ratio and a maximum total leverage ratio. The new revolving credit facility will contain customary events of default, including, without limitation, nonpayment of principal or interest, violation

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of covenants, incorrectness of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material judgments, ERISA, actual or asserted invalidity of security documents, change in control, failure of subordination and cancellation or termination of one or more of the operating licenses. An event of default under the new revolving credit facility would allow the lenders thereunder to accelerate the maturity of the indebtedness under the new revolving credit facility and would adversely affect the ability of the obligors to meet their obligations under the notes.

Existing Credit Facility

We have an existing senior credit facility with various financial institutions including affiliates of certain of the underwriters, with JPMorgan Chase Bank acting as administrative agent and collateral agent. This agreement provides for bank credit facilities consisting of a term loan facility of $200.0 million and a revolving credit facility of $50.0 million. The full amount of the term loan facility was drawn in a single drawing simultaneously with the closing of the offering of the ACSH senior notes in August 2003. All amounts outstanding under the existing credit facility will be repaid with the proceeds of this offering. Our existing credit facility permits us to prepay loans and to permanently reduce revolving credit commitments, in whole or in part, at any time.

The 9³/8% Senior Subordinated Notes Due 2009

In May 1999, ACSH issued $150.0 million in aggregate principal amount of senior subordinated notes due 2009 in a private transaction not subject to the registration requirements of the Securities Act. Cash interest is payable on the outstanding principal amount of the ACSH senior subordinated notes at the annual rate of 9³/8%. This interest has been payable on May 15th and November 15th of each year since November 15, 1999. In November of 1999, the holders of the ACSH senior subordinated notes exchanged them for registered notes in an exchange offer.

The ACSH senior subordinated notes rank junior in right of payment to all of the current and future senior indebtedness of ACSH, rank equally in right of payment to all of its current and future senior subordinated indebtedness (including the guarantees of the notes), and rank senior in right of payment to all of its current and future subordinated indebtedness. As obligations of a holding company, the ACSH senior subordinated notes are effectively subordinated to all of the obligations of its subsidiaries.

The ACSH senior subordinated notes are not redeemable until May 15, 2004. Thereafter, the ACSH senior subordinated notes will be redeemable at the option of ACSH for a price equal to 104.688% of the principal amount of such notes declining to 100% of the principal amount of such notes on or after May 15, 2007, in each case plus accrued and unpaid interest. Upon a change of control, as described in the indenture governing the ACSH senior subordinated notes, each holder will be able to require ACSH to repurchase that holder's senior subordinated notes at a price equal to 101% of the principal amount, subject to restrictions contained in our new revolving credit facility.

The indenture contains various covenants that, among other things, limit:

•: the incurrence of indebtedness by ACSH;
•: the payment of restricted payments, including the payment of dividends on stock and purchases of stock;
•: the sale of ACSH's assets or stock in its subsidiaries;
•: transactions with affiliates;
•: mergers, consolidations, and sales of assets; and
•: the business activities in which ACSH may engage.

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The indenture also limits the extent to which ACSH may permit restrictions on the ability of its subsidiaries to pay dividends and make other distributions. Each of these limitations, however, is subject to qualifications set forth fully in the indenture.

The indenture also contains events of default customary for obligations of this type, including:

•: a default in the payment of interest on the ACSH senior subordinated notes when due and payable;
•: the acceleration of debt in an amount in excess of $5.0 million; and
•: the rendering of any judgment for the payment of money in excess of $5.0 million against ACSH,

subject, in each case, to applicable grace periods.

Payment of all amounts outstanding under the ACSH senior subordinated notes could be accelerated in the event of a default under the indenture governing them.

The 9⁷/8% Senior Notes Due 2011

In August 2003, ACSH issued $182.0 million in aggregate principal amount of senior notes due 2011. Cash interest is payable on the outstanding principal amount of the senior notes at the annual rate of 9⁷/8%. This interest has been payable on February 15th and August 15th of each year since August 26, 2003.

The ACSH senior notes rank equal in right of payment to all of the current and future senior indebtedness of ACSH, and rank senior in right of payment to all of its current and future subordinated indebtedness. As obligations of a holding company, the ACSH senior notes are effectively subordinated to all of the obligations of the subsidiaries of ACSH that are not guarantors.

ACSH may redeem up to 35% of the ACSH senior notes using the proceed of equity offerings at a price equal to 109.875% of the principal amount of such notes on one or more occasions prior to August 15, 2006. The ACSH senior notes are not otherwise redeemable until August 15, 2007. Thereafter, the senior notes will be redeemable at the option of ACSH for a price equal to 104.938% of the principal amount of such notes declining to 100% of the principal amount of such notes on or after August 15, 2010, in each case plus accrued and unpaid interest. Upon a change of control, as described in the indenture governing the senior notes, each holder will be able to require ACSH to repurchase that holder's ACSH senior notes at a price equal to 101% of the principal amount, subject to restrictions contained in our new revolving credit facility.

The indenture contains various covenants that, among other things, limit:

•: the incurrence of indebtedness by ACSH;
•: the payment of restricted payments, including the payment of dividends on stock and purchases of stock;
•: the sale of ACSH's assets or stock of its subsidiaries;
•: transactions with affiliates;
•: mergers, consolidations, and sales of assets; and
•: the business activities in which ACSH may engage.

The indenture also limits the extent to which we may permit restrictions on the ability of the subsidiaries of ACSH to pay dividends and make other distributions. Each of these limitations, however, is subject to qualifications set forth fully in the indenture.

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The indenture also contains events of default customary for obligations of this type, including:

•: a default in the payment of interest on the ACSH senior notes when due and payable;
•: the acceleration of debt in an amount in excess of $5.0 million; and
•: the rendering of any judgment for the payment of money in excess of $5.0 million against ACSH,

subject, in each case, to applicable grace periods.

Payment of all amounts outstanding under the ACSH senior notes could be accelerated in the event of a default under the indenture governing them.

13% Senior Discount Debentures Due 2011

On May 14, 1999, we issued $46.9 million in aggregate principal amount of senior discount debentures due 2011 and 828,261 warrants. As of December 31, 2003, approximately $17.3 million in aggregate principal amount of the debentures remained outstanding. The discount debentures are redeemable beginning May 15, 2004 at our option at 106.5% of the principal amount declining to 100% of the principal amount on or after May 15, 2009, in each case plus accrued and unpaid interest. The principal amount outstanding, including accrued and unpaid interest, will be repaid with the proceeds of this offering, and the debentures will be redeemed.

Interest Rate Swap Arrangements

Concurrently with the closing of this offering, we will enter into interest rate swap arrangements, which we refer to as the interest rate swap arrangements. The interest rate swap arrangements will generate fixed payments totaling $ million annually until December 31, 2008, which we intend to use to satisfy a portion of the interest payment obligations on the 9⁷/8% senior notes due 2011 issued by ACSH and the 9³/8% senior subordinated notes due 2009 issued by ACSH, which we refer to as the ACSH notes. The fixed swap payments under the interest rate swap arrangements will be received by us on identical dates to the interest payment dates on the ACSH notes. We believe the interest rate swap arrangements together with the interest payments on the notes create the economic equivalent of paying a fixed market rate of interest that we would have obtained had we refinanced the ACSH notes with a new senior secured credit facility with a five-year term although the interest rate swap arrangements will be accounted for as notes receivable under generally accepted accounting principles in the United States. We will be required to pay $ million upon closing of the Transactions in consideration for entering into the interest rate swap arrangements. This amount represents the present value of the payments under the interest rate swap arrangements. We believe that this amount is reasonably consistent with the amount of cost we would have incurred to refinance and tender for or call, as the case may be, the ACSH notes.

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DESCRIPTION OF THE IDSs

General

We are selling IDSs in this offering. Each IDS initially represents:

•: one share of our Class A common stock; and
•: $ aggregate principal amount of our % senior subordinated notes due 2014.

The ratio of Class A common stock to principal amount of notes represented by an IDS is subject to change in the event of a stock split, recombination or reclassification of our Class A common stock. For example, if we elect to effect a two-for-one stock split, from and after the effective date of the stock split, each IDS will represent two shares of Class A common stock and the same principal amount of notes as it previously represented. Likewise, if we effect a recombination or reclassification of our Class A common stock, each IDS will thereafter represent the appropriate number of shares of Class A common stock on a recombined or reclassified basis, as applicable, and the same principal amount of notes as it previously represented. Immediately following the occurrence of any such event, we will file with the SEC a Current Report on Form 8-K, or any other applicable form, disclosing the changes in the ratio of Class A common stock to principal amount of notes as a result of such event.

The ratio of Class A common stock to principal amount of notes represented by an IDS is also subject to change in the event we exercise our right to redeem notes. See "Description of Notes — Optional Redemption."

Holders of IDSs are the beneficial owners of the Class A common stock and notes represented by such IDSs and, through their broker or other financial institution and DTC, will have exactly the same rights, privileges and preferences, including voting rights, rights to receive distributions, rights and preferences in the event of a default under the indenture governing the notes, ranking upon bankruptcy and rights to receive communications and notices as a beneficial owner of separately held Class A common stock and notes, as applicable, would have through its broker or other financial institution and DTC.

The IDSs will be available in book-entry form only. As discussed below under "— Book Entry Settlement and Clearance," a nominee of DTC will be the sole registered holder of the IDSs. That means you will not be a registered holder of IDSs or be entitled to receive a certificate evidencing your IDSs. You must rely on the procedures used by your broker or other financial institution that will maintain your book-entry position to receive the benefits and exercise the rights of a holder of IDSs that are described below. We urge you to consult with your broker or financial institution to find out what those procedures are.

Voluntary Separation and Recombination

Holders of IDSs, whether purchased in this offering or in subsequent offerings of IDSs, may separate their IDSs into the shares of our Class A common stock and notes represented thereby at any time after the earliest of (1) 90 days from the closing of this offering, (2) the commencement of a change of control repurchase offer or (3) the commencement of an asset sale repurchase offer, as described below under "Description of Notes — Change of Control." Such separation would be effected through their broker or other financial institution. Similarly, any holder of our Class A common stock and notes may, at any time, through his or her broker or other financial institution, combine the applicable number of shares of our Class A common stock and principal amount of notes to form IDSs. See "— Book-Entry Settlement and Clearance" below for more information on the method by which delivery and surrender of IDSs and delivery of shares of Class A common stock and our notes will be effected.

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Automatic Separation

Upon the occurrence of any of the following, the IDSs will be automatically separated into the shares of Class A common stock and notes represented thereby:

•: exercise by us of our right to redeem all of the notes, which may be represented by IDSs at the time of such redemption,
•: the date on which principal on the notes becomes due and payable, whether at the stated maturity date or upon acceleration thereof,
•: certain bankruptcy events relating to us, or
•: if DTC is unwilling or unable to continue as securities depository with respect to the IDSs or ceases to be a registered clearing agency under the Securities Exchange Act of 1934 and we are unable to find a successor depository.

Following any such automatic separation, shares of Class A common stock and the notes may no longer be recombined to form IDSs.

Book Entry Settlement and Clearance

DTC will act as securities depository for the IDSs, the notes and shares of Class A common stock represented by the IDSs and the separate notes, which we refer to collectively as the "securities." The notes and the shares of our Class A common stock represented by the IDSs and the separate notes will be represented by one or more global notes and global stock certificates. The global notes and global stock certificates will be issued in fully-registered form in the name of DTC's nominee, Cede & Co.

Book Entry Procedures

If you intend to purchase IDSs or separate notes in the manner provided by this prospectus you must do so through the DTC system or through a DTC participant. The DTC participant that you purchase through will receive a credit for the applicable security on DTC's records. The ownership interest of each actual purchaser of the applicable security, who we refer to as a "beneficial owner," is to be recorded on the DTC participant's records. Beneficial owners will not receive written confirmation from DTC of their purchases, but beneficial owners are expected to receive written confirmations providing details of their purchase and sale transactions, as well as periodic statements of their holdings, from the DTC participant through which the beneficial owner entered into such purchase and sale transactions.

All interests in the securities will be subject to the operations and procedures of DTC. We provide the following summaries of those operations solely for your convenience. The operations and procedures of each settlement system may be changed at any time. We are not responsible for those procedures and operations.

DTC has advised us as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York State Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered under Section 17A of the Securities Exchange Act of 1934. DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic

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book-entry changes to the accounts of its participants. DTC's participants include securities brokers and dealers, including the underwriters, banks and trust companies, clearing corporations and other organizations. Indirect access to DTC's system is also available to others such as banks, brokers, dealers and trust companies. These indirect participants clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. The rules that apply to DTC and its participants are on file with the SEC.

To facilitate subsequent transfers, all securities deposited by DTC participants with DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the securities. DTC's records reflect only the identity of the DTC participants to whose accounts such securities are credited, which may or may not be the beneficial owners. The DTC participants will remain responsible for keeping account of their holdings on behalf of their customers.

Transfers of ownership interests in the securities are to be accomplished by entries made on the books of DTC participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in the applicable security except in the event that use of the book-entry system for the securities is discontinued.

Any voluntary or automatic separation of IDSs, and any subsequent combination of IDSs from notes and Class A common stock, are to be accomplished by entries made by the DTC participants acting on behalf of beneficial owners. In any such case, the DTC participant's account through which a separation or recombination is effected will be credited and debited for the applicable securities on DTC's records. We have been informed by DTC that the current fee per transaction per DTC participant account for any separation or recombination is $9.50. There may be certain transactional fees imposed upon you by brokers or other financial intermediaries in connection with separation or recombination of IDSs and you are urged to consult your broker regarding any such transactional fees.

Following the automatic separation of the IDSs as a result of the redemption or maturity of any notes, shares of Class A common stock and notes may no longer be combined to form IDSs. Conveyance of notices and other communications by DTC to DTC participants, by direct DTC participants to indirect DTC participants, and by DTC participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Neither DTC nor Cede & Co. will consent or vote with respect to the securities. Under its usual procedures, DTC would mail an omnibus proxy to us as soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those DTC participants to whose accounts the securities are credited on the record date (identified in a listing attached to the omnibus proxy).

We and the transfer agent and registrar for the IDSs and the separate notes will make any payments on the securities to DTC. DTC's practice is to credit DTC participants' accounts on the payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payment date. Payments by DTC participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such DTC participant and not of DTC, us or the transfer agent and registrar for the IDSs and the separate notes, subject to any statutory or regulatory requirements as may be in effect from time to time.

We or the transfer agent and registrar for the IDSs and the separate notes will be responsible for the payment of all amounts to DTC. DTC will be responsible for the disbursement of those payments

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to DTC participants, and the DTC participants will be responsible for disbursements of those payments to beneficial owners. We will remain responsible for any actions DTC and participants take in accordance with instructions we provide.

DTC may discontinue providing its service as securities depository with respect to the IDSs, the shares of our Class A common stock or our notes at any time by giving reasonable notice to us or the transfer agent and registrar for the IDSs. If DTC discontinues providing its service as securities depository with respect to the IDSs and we are unable to obtain a successor securities depository, the IDSs will automatically separate and you will automatically take a position in the shares of our Class A common stock and notes represented by the IDS. If DTC discontinues providing its service as securities depository with respect to the shares of our Class A common stock or our notes and we are unable to obtain a successor securities depository, we will print and deliver, to the persons designated by the applicable DTC participant shown on the records of DTC, certificates for the securities subject to the discontinued service.

Also, in case we decide to discontinue use of the system of book entry transfers through DTC (or a successor securities depository) we will print and deliver to you certificates for the common stock and notes you may own.

The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that we believe to be reliable, including DTC.

Except for actions taken by DTC in accordance with our instructions, neither we nor any trustee nor the underwriters will have any responsibility or obligation to participants, or the persons for whom they act as nominees, with respect to:

•: the accuracy of the records of DTC, its nominee, or any DTC participant, or any ownership interest in the securities in DTC's records, or
•: any payments to, or the providing of notice to, DTC participants or beneficial owners.

Procedures Relating to Subsequent Issuances

The indenture governing the notes will provide that, in the event there is a subsequent issuance of notes having terms identical (except for the issuance date) to the notes represented by the IDSs, and such subsequently issued notes are treated as issued with OID for U.S. federal income tax purposes or are issued subsequent to an automatic exchange of notes described below or if we otherwise determine that such notes need to have a new CUSIP number, each holder of notes or IDSs, as the case may be, agrees that a portion of such holder's notes, whether held directly in book entry form, or held as part of IDSs, will be automatically exchanged, without any further action of such holder, for a portion of the notes acquired by the holders of such subsequently issued notes. Consequently, following each such subsequent issuance and exchange, each holder of notes or IDSs, as the case may be, will own an indivisible unit composed of notes of each separate issuance in the same proportion as each other holder. Immediately following any exchange resulting from a subsequent offering, a new CUSIP number will be assigned to represent the indivisible unit consisting of the notes outstanding prior to the subsequent issuance and the notes issued in the subsequent issuance. Accordingly, the notes issued in the original offering cannot be separated from the notes issued in any subsequent offering. In addition, immediately following any exchange resulting from a subsequent offering, new IDSs will be issued in exchange for the existing IDSs which new IDSs will consist of the indivisible unit described above representing the proportionate principal amounts of each issuance of notes, but with the same aggregate principal amount as the notes, or the indivisible unit, represented by the IDSs immediately prior to such subsequent issuance and exchange, and the Class A common stock. All accounts of DTC participants with a position in the securities will be automatically revised to reflect the new CUSIP numbers.

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Most subsequent issuances of notes, including subsequent issuances of notes which have OID and all subsequent issuances six months after the date of this offering, may require trades on the to settle up to 24 hours after the date such trades would settle absent such subsequent issuance or settle for cash, consistent with practices for the date of such issuance. The has informed us that they will broadcast any such alternate settlement procedures in advance of any relevant trading day, consistent with their established procedures. Based upon these discussions, we do not believe that any settlement delays or cash settlement procedures, if any, associated with subsequent issuances, will have a significant impact on the trading market for the IDSs. Immediately following any subsequent issuance, we will file with the SEC a Current Report on Form 8-K, or any other applicable form, disclosing the changes, if any, to the OID attributable to your notes as a result of such subsequent issuance. If such notes are issued with any amount of discount, holders of such notes may not be able to recover the portion of their principal amount treated as unaccrued discount in the event of an acceleration of the notes or our bankruptcy prior to the maturity of the notes. See "Risk Factors—Risks Relating to the IDSs, including the Class A Common Stock and Notes Represented by the IDSs and the Separate Notes—Subsequent issuances of notes may cause you to recognize original issue discount and may reduce your recovery in the event of bankruptcy."

Transfer Agent and Registrar for the IDSs

will be the transfer agent and registrar for the IDSs.

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DESCRIPTION OF CAPITAL STOCK

We have set forth below a description of the material terms and provisions of our amended and restated certificate of incorporation and our amended and restated by-laws, which are being amended and restated in connection with the reclassification and this offering. The following description of our capital stock is intended as a summary only and is qualified in its entirety by reference to the forms of our amended and restated certificate of incorporation and amended and restated by-laws, which are filed as exhibits to the registration statement, of which this prospectus forms a part, and which will become effective immediately prior to the closing of this offering.

Authorized Capitalization

Our authorized capital stock will consist of:

•: shares of Class A common stock, par value $0.01 per share;
•: shares of Class B common stock, par value $0.01 per share;
•: shares of Class C common stock, par value $0.01 per share; and
•: 5,000,000 shares of preferred stock, par value $0.01 per share.

After this offering, there will be shares of our Class A common stock, shares of our Class B common stock, no shares of our Class C common stock and no shares of our preferred stock outstanding.

Class A Common Stock

All shares of our Class A common stock to be outstanding upon the closing of this offering will be validly issued, fully paid and nonassessable.

Class Restrictions

We may not issue any share of Class A common stock, or securities which, by their terms are convertible or exchangeable for shares of Class A common stock, unless, at or prior to the time of such issuance (or prior to the earliest possible time of any such conversion or exchange) we issue a proportionate number of IDSs such that no holder of Class A common stock, or securities convertible into or exchangeable for Class A common stock, will, at any time, have the right to hold Class A common stock in the form of an IDS unless such IDS has been issued in a transaction that is registered under the Securities Act.

Dividends

Holders of our Class A common stock will be entitled to receive such dividends and other distributions in cash, stock or property of ours as may be declared by our Board of Directors from time to time out of our assets or funds legally available for dividends or other distributions. Dividends on the Class A common stock will be pari passu (based on their relative dividends rates) with dividends on the Class B common stock. We cannot declare dividends on our Class A common stock unless at such time the corresponding proportionate dividend is declared on our Class B common stock. At the time of the closing of this offering, our board of directors intends to adopt a dividend policy regarding our Class B common stock. See "Dividend Policy and Restrictions."

Rights Upon Liquidation

In the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of shares of our Class A common stock will be entitled to share equally in our assets remaining after

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payment of all debts and other liabilities with other classes of our common stock, subject to the liquidation preference of any outstanding preferred stock.

Voting Rights

Shares of our Class A common stock carry one vote per share. Holders of shares of our Class A common stock have no cumulative voting rights. Holders of Class A common stock, Class B common stock and Class C common stock will vote as one class on all matters presented to the stockholders for a vote. Class A common stock will have a class vote on any amendment (including any amendment as a result of a merger) to our certificate of incorporation that would adversely affect the rights of holders of Class A common stock.

Other Rights

Holders of shares of our Class A common stock have no preemptive rights. The holders of Class A common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Listing

The shares of our Class A common stock will not be listed for separate trading on the until the minimum listing criteria on the are satisfied by our outstanding shares of Class A common stock, no longer held in the form of IDSs, for a period of 30 consecutive trading days. The minimum listing criteria on requires . The Class A common stock represented by the IDSs offered by this prospectus will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, unless they are purchased by affiliates as that term is defined in Rule 144 under the Securities Act.

Transfer Agent and Registrar

is the transfer agent and registrar for our shares of Class A common stock.

Class B Common Stock

All shares of our Class B common stock to be outstanding upon closing of this offering will be validly issued, fully paid and nonassessable.

Class Restrictions

Shares of Class B common stock may not be combined with notes to form IDSs.

Redemption; Exchange

A portion of the shares of Class B common stock issued in the reclassification will be subject to pro rata redemption on the 12^th day after the completion of the reclassification from the net proceeds received by us from the sale of additional IDSs upon any exercise of the overallotment option granted to the underwriters in this offering. The redemption price per share of Class B common stock will be equal to the net proceeds received by us per IDS sold upon the relevant exercise of the overallotment option. On the 12^th day after the completion of the reclassification, any outstanding shares of our Class B common stock in (including any shares remaining outstanding as a result of a non-exercise or partial exercise of the overallotment option) in excess of 10% of the overall value of our equity capitalization will be automatically exchanged, on a pro rata basis, into IDSs identical to those sold in this offering. Any remaining outstanding shares of Class B common stock will be automatically exchanged into IDSs on the second anniversary of this offering if, at such date, there is no default or event of default under our indebtedness or the indebtedness of our subsidiaries. If there is a default

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under any such indebtedness on the second anniversary of this offering, the Class B common stock will be automatically exchanged into IDSs at the time such default is cured or otherwise ceases to exist. Any such exchange will be based on a ratio of one IDS per share of Class B common stock so exchanged (as may be adjusted for stock splits, dividends, combinations or reclassifications). This ratio will also be proportionately adjusted in the event we issue any IDSs at less than fair market value prior to the date of such exchange.

Transfer Restrictions

Shares of our Class B common stock will not be transferable until the 12th day after the closing of the offering.

Dividends

Holders of our Class B common stock will be entitled to receive such dividends and other distributions in cash, stock of property of ours as may be declared by our board of directors from time to time out of our assets or funds legally available for dividends or other distributions. Dividends on the Class B common stock will be pari passu (based on their relative dividend rates) with dividends on the Class A common stock. We may not declare dividends on our Class A common stock unless at such time the corresponding proportionate dividend is declared on our Class B common stock. See "Dividend Policy and Restrictions."

Rights Upon Liquidation

In the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of shares of our Class B common stock will be entitled to share equally in our assets remaining after payment of all debts and other liabilities with other classes of our common stock, subject to the liquidation preference of any outstanding preferred stock.

Voting Rights

Shares of our Class B common stock carry one vote per share. Holders of shares of our Class B common stock have no cumulative voting rights. Holders of Class A common stock, Class B common stock and Class C common stock will vote as one class on all matters presented to the stockholders for a vote. Holders of Class B common stock will have a class vote on any amendment (including any amendment as a result of a merger) to our certificate of incorporation that would adversely affect the rights of holders of Class B common stock.

Other Rights

Holders of shares of our Class B common stock have no preemptive rights. The holders of Class B common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Listing

Following the 12th day after the completion of the reclassification, we expect that our Class B common stock will be listed for trading on , subject to satisfying the minimum listing criteria. The minimum listing criteria for the include .

Transfer Agent and Registrar

is the transfer agent and registrar for our shares of Class B common stock.

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Class C Common Stock

No shares of our Class C common stock will be outstanding upon the closing of this offering.

Conversion

Shares of Class C common stock will convert automatically into shares of Class A common stock on a one-for-one basis at such time as the IDSs are automatically separated. See "Description of the IDSs—Automatic Separation."

Dividends

Holders of our Class C common stock will be entitled to receive such dividends and other distributions in cash, stock or property of ours as may be declared by our Board of Directors from time to time out of our assets or funds legally available for dividends or other distributions. See "Dividend Policy and Restrictions."

Rights Upon Liquidation

In the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of shares of our Class C common stock will be entitled to share equally in our assets remaining after payment of all debts and other liabilities with other classes of our common stock, subject to the liquidation preference of any outstanding preferred stock.

Voting Rights

Shares of our Class C common stock carry one vote per share. Holders of shares of our Class C common stock have no cumulative voting rights. Holders of Class A common stock, Class B common stock and Class C common stock will vote as one class on all matters presented to the stockholders for a vote. Holders of Class C common stock will have a class vote on any amendment (including any amendment as a result of a merger) to our certificate of incorporation that would adversely affect the rights of holders of Class C common stock.

Other Rights

Holders of shares of our Class C common stock have no preemptive rights. The holders of Class C common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Preferred Stock

Our certificate of incorporation provides that we may issue up to 5,000,000 shares of our preferred stock in one or more series as may be determined by our board of directors.

Our board of directors has broad discretionary authority with respect to the rights of issued series of our preferred stock and may take several actions without any vote or action of the holders of our common stock, including:

•: determining the number of shares to be included in each series;
•: fixing the designation, powers, preferences and relative rights of the shares of each series and any qualifications, limitations or restrictions with respect to each series, including provisions related to dividends, conversion, voting, redemption and liquidation, which may be superior to those of our common stock; and
•: increasing or decreasing the number of shares of any series.

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The board of directors may authorize, without approval of holders of our common stock, the issuance of preferred stock with voting and conversion rights that could adversely affect the voting power and other rights of holders of our common stock. The number of authorized shares of our preferred stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of at least a majority of our common stock, without a vote of the holders of any other class or series of our preferred stock unless required by the terms of such class or series of preferred stock.

Our preferred stock could be issued quickly with terms designed to delay or prevent a change in the control of our company or to make the removal of our management more difficult. This could have the effect of discouraging third-party bids for our common stock or may otherwise adversely affect the market price of the IDSs, our common stock or the notes.

We believe that the ability of our board of directors to issue one or more series of our preferred stock will provide us with flexibility in structuring possible future financings and acquisitions, and in meeting other corporate needs that might arise. The authorized shares of our preferred stock, as well as shares of our common stock, will be available for issuance without action by our common stockholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded.

Although our board of directors has no intention at the present time of doing so, it could issue a series of our preferred stock that could, depending on the terms of such series, be used to implement a stockholder rights plan or otherwise impede the completion of a merger, tender offer or other takeover attempt of our company. Our board of directors could issue preferred stock having terms that could discourage an acquisition attempt through which an acquiror may be able to change the composition of the board of directors, including a tender offer or other transaction that some, or a majority, of our stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then current market price.

Anti-Takeover Effects of Various Provisions of Delaware Law and Our Amended and Restated Certificate of Incorporation and Amended and Restated By-laws

Provisions of the Delaware General Corporation Law, or the DGCL, our amended and restated certificate of incorporation and amended and restated by-laws contain provisions that may have some anti-takeover effects and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by stockholders.

Delaware Anti-Takeover Statute

We are subject to Section 203 of the DGCL. Subject to specific exceptions, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the time the person became an interested stockholder, unless:

•: the business combination, or the transaction in which the stockholder became an interested stockholder, is approved by our board of directors prior to the time the interested stockholder attained that status;
•: upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

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•: at or after the time a person became an interested stockholder, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

"Business combinations" include mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to various exceptions, in general an "interested stockholder" is a person who, together with his or her affiliates and associates, owns, or within three years did own, 15% or more of the shares of the corporation's outstanding voting stock. These restrictions could prohibit or delay the accomplishment of mergers or other takeover or change in control attempts with respect to us and, therefore, may discourage attempts to acquire us.

Our Amended and Restated Certificate of Incorporation and Amended and Restated By-laws

In addition, provisions of our amended and restated certificate of incorporation and amended and restated by-laws, which are summarized in the following paragraphs, may have an anti-takeover effect.

Quorum Requirements; Removal of Directors. Our amended and restated by-laws provide for a minimum quorum of one-third in voting power of the outstanding shares of our capital stock entitled to vote, except that a minimum quorum of a majority in voting power of the outstanding shares of our capital stock entitled to vote is necessary to hold a vote for any director in a contested election, the removal of a director or the filling of a vacancy on our board of directors. Our amended and restated certificate of incorporation provides that directors may be removed without cause only by the affirmative vote of at least 80% of the outstanding shares of our capital stock entitled to vote generally in the election of directors.

No Cumulative Voting. The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless our certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation does not expressly address cumulative voting.

No Stockholder Action by Written Consent; Calling of Special Meeting of Stockholders. Our amended and restated certificate of incorporation prohibits stockholder action by written consent. Our amended and restated by-laws provide that special meetings of our stockholders may be called only by the chairman of the board of directors or the president or by resolution of the board of directors.

Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our amended and restated by-laws provide that stockholders seeking to bring business before or to nominate candidates for election as directors at an annual meeting of stockholders must provide timely notice of their proposal in writing to the corporate secretary. To be timely, a stockholder's notice must be delivered or mailed and received at our principal executive offices not less than 90 nor more than 120 days in advance of the anniversary date of the immediately preceding annual meeting of stockholders. Our amended and restated by-laws also specify requirements as to the form and content of a stockholder's notice. These provisions may impede stockholders' ability to bring matters before an annual meeting of stockholders or make nominations for directors at an annual meeting of stockholders. Stockholder nominations for the election of directors at a special meeting must be received by our corporate secretary by the later of 10 days following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made or 90 days prior to the date that meeting is proposed to be held.

Limitations on Liability and Indemnification of Officers and Directors. The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties as directors. Our amended and restated certificate of incorporation includes a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director, except for liability:

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•: for breach of duty of loyalty;
•: for acts or omissions not in good faith or involving intentional misconduct or knowing violation of law;
•: under Section 174 of the DGCL (unlawful dividends or stock repurchases); or
•: for transactions from which the director derived improper personal benefit.

Our amended and restated certificate of incorporation provides that we must indemnify and advance expenses to our directors and officers to the fullest extent authorized by the DGCL. We are also expressly authorized to, and do, carry directors' and officers' insurance for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.

The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

Authorized but Unissued Shares. Subject to the terms of our amended and restated certificate of incorporation, our authorized but unissued shares of common stock and preferred stock will be available for future issuance without your approval. We may use additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Supermajority Provisions. The DGCL provides generally that the affirmative vote of a majority in voting power of the outstanding shares entitled to vote is required to amend a corporation's certificate of incorporation, unless the certificate of incorporation requires a greater percentage. Our amended and restated certificate of incorporation provides that the following provisions in the amended and restated certificate of incorporation may be amended only by a vote of 80% of all the outstanding shares of our capital stock entitled to vote:

•: the provisions relating to the removal of members of our Board of Directors;
•: the limitation on the liability of our directors to us and our stockholders;
•: the obligation to indemnify and advance expenses to the directors and officers to the fullest extent authorized by the DGCL;
•: the provisions granting authority to our board of directors to amend or repeal our by-laws without a stockholder vote, as described in more detail in the next succeeding paragraph; and
•: the supermajority voting requirements listed above.

In addition, our amended and restated certificate of incorporation grants our board of directors the authority to amend and repeal our by-laws without a stockholder vote in any manner not inconsistent with the laws of the State of Delaware or our amended and restated certificate of incorporation.

Our amended and restated certificate of incorporation provides that our amended and restated by-laws may be amended by stockholders representing no less than 80% of the voting power of all the outstanding shares of our capital stock entitled to vote.

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DESCRIPTION OF NOTES

You can find the definitions of certain terms used in this description under the subheading "— Certain Definitions." For purposes of this section, the term "Issuer" refers only to Alaska Communications Systems Group, Inc. and its permitted successors in accordance with the terms of the indenture, and not to any of its subsidiaries and the term "ACSH" refers only to Alaska Communications Systems Holdings, Inc., our operating company, and its permitted successors in accordance with the terms of the indenture, and not to any of its subsidiaries. References in this section to the "Notes" refer to the % Senior Subordinated Notes due 2014 issued by the Issuer, including such notes issued as part of IDSs or issued separately as part of the offering, which notes are part of the same series under the same indenture.

The Issuer will issue the Notes under an indenture among itself, the Guarantors and , as trustee. The terms of the Notes will include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended.

The following description is only a summary of the material provisions of the indenture. It does not restate the indenture in its entirety. We urge you to read the indenture because it, and not this description, defines your rights as a holder of the Notes. We have filed a copy of the indenture as an exhibit to the registration statement of which this prospectus forms a part. Certain capitalized terms used in this description but not defined below or under "— Certain Definitions" have the meanings assigned to them in the indenture.

The indenture will provide for the issuance of an unlimited aggregate principal amount of additional Notes having identical terms and conditions to the Notes offered hereby, including the Guarantees (the "Additional Notes"), subject to compliance with the covenants contained in the indenture. Additional Notes will vote on all matters with the Notes offered hereby. The Additional Notes will be deemed to have the same accrued current period interest and defaults as the notes issued in this offering and will be deemed to be subject to the same number of Payment Blockage Periods as the Notes issued in this offering.

The Notes will be initially issued in an aggregate principal amount of $ . We will also issue $ aggregate principal amount of Notes within 12 days after the completion of this offering, either as a result of the underwriters' exercise of their overallotment option or as a result of our issuance of IDSs in exchange for a portion of our outstanding Class B Common Stock. The registered holder of a Note will be treated as the owner of it for all purposes. Only registered holders will have rights under the indenture.

The Notes will be issued in fully registered form, without coupons.

Overview of the Notes and the Guarantees

The Notes:

•: will be general unsecured obligations of the Issuer;
•: will be subordinated in right of payment to all existing and future Senior Debt of the Issuer;
•: will rank equally in right of payment with all existing and future senior subordinated Indebtedness of the Issuer;
•: will be senior in right of payment to all existing and future Subordinated Obligations of the Issuer;
•: will be effectively subordinated to all secured Indebtedness of the Issuer and its Subsidiaries to the extent of the value of the assets securing such Indebtedness;

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•: will be effectively subordinated to all liabilities (including trade payables) and Preferred Stock of each Subsidiary of the Issuer that is not a Guarantor; and
•: will be guaranteed by the Guarantors, as described under "— Guarantees."

Assuming this offering and the related transactions had been completed as of December 31, 2003, the Issuer, together with its consolidated subsidiaries that are guarantors, would have had approximately $189.9 million of Senior Debt, of which $182.0 million would have consisted of indebtedness under ACSH's 9⁷/8% senior notes due 2011, and the Subsidiary of the Issuer that is not a Guarantor would have had neither indebtedness nor other liabilities.

The Guarantees

The Notes will be guaranteed by each of the Domestic Subsidiaries of the Issuer, other than Unrestricted Subsidiaries. Each Guarantee:

•: will be general unsecured obligations of the applicable Guarantor;
•: will be subordinated in right of payment to all existing and future Senior Debt of the applicable Guarantor;
•: will rank equally in right of payment with all existing and future senior subordinated Indebtedness of the applicable Guarantor;
•: will be senior in right of payment to all existing and future Subordinated Obligations of the applicable Guarantor; and
•: will be effectively subordinated to any secured Indebtedness of the applicable Guarantor and its Subsidiaries to the extent of the value of the assets securing such Indebtedness.

Each Guarantee will be subordinated to the prior payment in full of all Senior Debt of the applicable Guarantor. The obligations of each Guarantor under the Guarantee will be limited as necessary to prevent the Guarantee from constituting a fraudulent conveyance under applicable law. See "Risk Factors — Risks Relating to the IDSs and the Common Stock and Notes Represented by the IDSs — Federal and state statutes allow courts, under specific circumstances, to void the notes or the guarantees and require noteholders to return payments received from us or the guarantors." Assuming this offering and the related transactions had been completed on December 31, 2003, the Guarantors would have had approximately $189.9 million of Senior Debt.

Not all of our future Subsidiaries will guarantee the Notes. In the event of a bankruptcy, liquidation or reorganization of any of these non-Guarantor Subsidiaries, the non-Guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to us. ACS Media Holdings LLC will be the only Subsidiary of the Issuer that will be an Unrestricted Subsidiary of the Issuer and not a Guarantor on the Closing Date. ACS Media Holdings LLC holds our remaining interest in our former Directories Business and does not conduct any operations. On December 31, 2003, ACS Media Holdings LLC had assets of $9,762 on a book-value basis and $160,000 on an estimated-fair-value basis, or less than 0.1% in each case, of our total consolidated assets.

As of the Closing Date, all of our Subsidiaries (other than ACS Media Holdings LLC) will be "Restricted Subsidiaries." However, under certain circumstances, the Issuer will be able to designate other current or future direct or indirect Subsidiaries of the Issuer as "Unrestricted Subsidiaries." Unrestricted Subsidiaries will not be Guarantors of the Notes or subject to any of the restrictive covenants set forth in the indenture.

If the Issuer or any Restricted Subsidiaries creates or acquires another Domestic Subsidiary on or after the Closing Date, then that newly acquired or created Domestic Subsidiary must become a

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Guarantor under the terms of the indenture (unless the Issuer designates such Subsidiary as an Unrestricted Subsidiary in accordance with the indenture).

Principal, Maturity and Interest

We will initially issue Notes in an aggregate principal amount of $ million.

The Notes will mature on , 2014. The Issuer may extend the maturity of the Notes for up to two additional successive five-year terms if the following conditions are satisfied with respect to the applicable extension:

(1): as of the Extension Date either (A) the Issuer's Debt to EBITDA Ratio is less than to 1 or (B) the Adjusted EBITDA Coverage Ratio is at least to 1;
(2): as of the Extension Date, no Event of Default has occurred and is continuing with respect to the Notes;
(3): as of the Extension Date, no event of default has occurred and is continuing with respect to any other Indebtedness of the Issuer or any Restricted Subsidiary of the Issuer or could occur as a result of such extension, including under any Designated Senior Debt; and
(4): as of the Extension Date, there is no interest due but unpaid on the Notes or any other Indebtedness of the Issuer or any Significant Subsidiary of the Issuer.

For the purposes of the conditions above, the "Extension Date" shall mean the date on which the Issuer delivers written notice to the Trustee electing to extend the maturity of the Notes; provided that such date is not more than 90 days after the end of a fiscal quarter ending not more than 18 months nor less than 45 days before the end of the then-current term.

If the Issuer is going to extend the maturity of the Notes, the Issuer will cause a notice of such extension, including the new maturity date, to be sent to holders within 30 days after the Extension Date.

Interest on the Notes will accrue at the rate of % per year and will be payable quarterly in arrears on , , and , commencing on , 2004. The Issuer will make each interest payment to the holders of record on the immediately preceding , , and .

Interest on the Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Paying Agent and Registrar

We will pay the principal of, premium, if any, and interest on the Notes at any office of ours or any agency designated by us that is located in the Borough of Manhattan, the City of New York. We have initially designated the corporate trust office of the Trustee to act as the agent of the Issuer in such matters (the "Paying Agent"). The location of the corporate trust office is . We reserve the right, however, to pay interest to Holders by check mailed directly to Holders at their registered addresses.

Holders may exchange or transfer their Notes at the location given in the preceding paragraph. No service charge will be made for any registration of exchange or transfer of Notes. We may, however, require Holders to pay any transfer tax or other similar governmental charge payable in connection with such exchange or transfer.

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Optional Redemption

The Issuer may not redeem the Notes at its option prior to , 2009. After this date, the Issuer may redeem the Notes in whole or in part, on not less than 30 nor more than 60 days' prior notice, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest thereon, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period commencing on of the years set forth below:

Period		Redemption Price
2009			%
2010			%
2011			%
2012 and thereafter			%

In addition, at any time prior to , 2007, the Issuer may, at its option on one or more occasions, also redeem up to a maximum of 35% of the aggregate principal amount of the Notes with the Net Cash Proceeds of one or more Equity Offerings at a redemption price equal to % of the principal amount thereof, plus accrued and unpaid interest thereon, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided that:

(1): after giving effect to any such redemption, Notes (including Additional Notes) with an aggregate principal amount equal to at least 65% of the aggregate principal amount of the Notes issued on the Closing Date remain outstanding; and
(2): any such redemption by the Issuer must be made within 90 days of such related Equity Offering and must be made upon not less than 30 nor more than 60 days' notice mailed to each Holder of Notes being redeemed and otherwise in accordance with certain procedures set forth in the indenture.

The Issuer may exercise the optional redemption provisions above whether or not the IDSs have separated. In the event of a partial redemption at a time when some or all of the IDSs have not separated, the ratio of shares of Class A common stock to principal amount of notes represented by each outstanding IDS would increase.

Selection

In the case of a partial redemption, the Trustee will select the Notes to be redeemed on a pro rata basis or, if a pro rata basis does not comply with applicable legal requirements, by such other method as the Trustee shall deem to be fair and appropriate and that complies with applicable legal requirements. If any Note is redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount of such Note to be redeemed. A new Note in principal amount equal to the unredeemed portion of such Note will be issued in the name of the Holder upon cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions of Notes called for redemption so long as the Issuer has deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest on, the Notes to be redeemed.

Mandatory Redemption

The Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

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Subordination

The payment of principal, interest and premium, if any, on the Notes will be subordinated to the prior payment in full, in cash, of all Senior Debt of the Issuer, including Senior Debt of the Issuer incurred after the Closing Date.

The holders of Senior Debt of the Issuer will be entitled to receive payment in full in cash of all Obligations due in respect of Senior Debt of the Issuer (including interest after the commencement of any bankruptcy proceeding at the rate specified in the documentation for the applicable Senior Debt of the Issuer) before the Holders of Notes will be entitled to receive any payment with respect to the Notes (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trust described under "— Defeasance"), in the event of any distribution to creditors of the Issuer:

(1): in a liquidation or dissolution of the Issuer;
(2): in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Issuer or its property;
(3): in an assignment for the benefit of creditors; or
(4): in any marshaling of the Issuer's assets and liabilities.

The Issuer also may not make any payment in respect of the Notes (except in Permitted Junior Securities or from the trust described under "— Defeasance") if:

(1): a payment default on Designated Senior Debt of the Issuer occurs and is continuing beyond any applicable grace period; or
(2): any other default occurs and is continuing on any series of Designated Senior Debt of the Issuer that permits holders of that series of Designated Senior Debt of the Issuer to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from a representative of the holders of any Designated Senior Debt of the Issuer.

Payments on the Notes may and shall be resumed:

(1): in the case of a payment default on Designated Senior Debt of the Issuer, upon the date on which such default is cured or waived; and
(2): in case of any default referred to in clause (2) of the immediately preceding paragraph on Designated Senior Debt of the Issuer, the earliest of (x) the date on which such default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received and (z) the date the Trustee receives notice from the representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless the maturity of such Designated Senior Debt of the Issuer has been accelerated.

No new Payment Blockage Notice may be delivered unless and until:

(1): 360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice; and
(2): all scheduled payments of principal, interest and premium, if any, on the Notes that have come due have been paid in full in cash.

No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default has been cured or waived for a period of not less than 90 days.

If the Trustee or any Holder of the Notes receives a payment in respect of the Notes (except in Permitted Junior Securities or from the trust described under "— Defeasance") when:

(1): the payment is prohibited by these subordination provisions; and

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(2): the Trustee or the Holder has actual knowledge that the payment is prohibited; provided that such actual knowledge shall not be required in the case of any payment default on Designated Senior Debt of the Issuer;

the Trustee or the Holder, as the case may be, shall hold the payment in trust for the benefit of the holders of Senior Debt of the Issuer. Upon the proper written request of the holders of Senior Debt of the Issuer or if there is any payment default on any Designated Senior Debt, the Trustee or the Holder, as the case may be, shall deliver the amounts in trust to the holders of Senior Debt of the Issuer or their proper representative.

The Issuer and the Trustee must promptly notify holders of the Issuer's Senior Debt if payment of the Notes is accelerated because of an Event of Default.

As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the Issuer, Holders of Notes may recover less ratably than creditors of the Issuer who are holders of Senior Debt of the Issuer.

Payments under the Guarantee of each Guarantor will be subordinated to the prior payment in full of all Senior Debt of such Guarantor, including Senior Debt of such Guarantor incurred after the Closing Date, on the same basis as provided above with respect to the subordination of payments on the Notes by the Issuer to the prior payment in full of Senior Debt of the Issuer. See "Risk Factors — Risks Relating to the IDSs, Including the Class A Common Stock and Notes Represented by the IDSs, and the Class B Common Stock — Your right to receive payments on the notes is junior to our existing senior indebtedness and possibly all of our future borrowings. Further, the guarantees of these notes are junior to all of the guarantors' existing senior indebtedness and possibly to all their future borrowings."

"Designated Senior Debt" means:

(1): any Indebtedness outstanding under the Credit Agreement or any Indebtedness that refinances, in whole or in part, the Credit Agreement; and
(2): after payment in full in cash of all Obligations under the Credit Agreement, any other Senior Debt permitted under the indenture the principal amount of which is $ million or more and that has been designated by the Issuer as "Designated Senior Debt."

"Permitted Junior Securities" means:

(1): Capital Stock of the Issuer; or
(2): debt securities that are subordinated to all Senior Debt and any debt securities issued in exchange for Senior Debt at least to the same extent as, or to a greater extent than, the Notes and the Guarantees are subordinated to Senior Debt under the indenture.

"Senior Debt" means:

(1): all Indebtedness of the Issuer or any Guarantor outstanding under the Credit Agreement and any Indebtedness that refinances, in whole or in part, the Credit Agreement;
(2): any other Indebtedness of the Issuer or any Guarantor permitted to be incurred under the terms of the indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes or the relevant Guarantee; and
(3): all Obligations with respect to the items listed in the preceding clauses (1) and (2).

Notwithstanding anything to the contrary in the preceding clauses (1), (2) and (3), Senior Debt will not include:

(1): any liability for federal, state, local or other taxes owed or owing by the Issuer or any Guarantor;

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(2): any Indebtedness of the Issuer or any Guarantor to any of their Subsidiaries or other Affiliates;
(3): any trade payables;
(4): the portion of any Indebtedness that is incurred in violation of the indenture; provided that any outstanding Bank Indebtedness will not cease to be Senior Debt as a result of this clause (4) if the lenders thereunder obtained a representation from an officer of the Issuer or a Guarantor on the date such Indebtedness was incurred certifying that the incurrence of such Indebtedness was not prohibited by the Indenture;
(5): any Indebtedness of the Issuer or any Guarantor that, when incurred, was without recourse to the Issuer or any such Guarantor; or
(6): any repurchase, redemption or other obligation in respect of Disqualified Stock.

Guarantees

The Issuer currently conducts all of its operations through its Subsidiaries. All of the Domestic Subsidiaries, other than one Unrestricted Subsidiary, of the Issuer existing on the Closing Date and certain future Subsidiaries of the Issuer (collectively referred to as the "Guarantors"), as primary obligors and not merely as sureties, will, jointly and severally and irrevocably and unconditionally, guarantee on an unsecured senior subordinated basis the performance and full and punctual payment when due, whether at Stated Maturity, by acceleration, by redemption or otherwise, of all obligations of the Issuer under the indenture (including obligations to the Trustee) and the Notes, whether for payment of principal of, or interest on, the Notes, expenses, indemnification or otherwise (all such obligations guaranteed by such Guarantors, the "Guaranteed Obligations"). Such Guarantors will agree to pay, in addition to the amount stated above, any and all costs and expenses (including reasonable counsel fees and expenses) incurred by the Trustee or the Holders in enforcing any rights under the Guarantees. Each Guarantee will be limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable Guarantor without rendering the Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. Each Guarantee will be subordinated to the prior payment in full of all Senior Debt of that Guarantor.

Each Guarantee is a continuing guarantee and shall, except as described in the immediately succeeding paragraph, (1) remain in full force and effect until payment in full of all the Guaranteed Obligations, (2) be binding upon each Guarantor and its successors and (3) inure to the benefit of, and be enforceable by, the Trustee, the Holders and their successors, transferees and assigns.

Any Guarantee by a Subsidiary of the Issuer will be automatically released (1) upon the sale (including through merger or consolidation) of the Capital Stock, or all or substantially all the assets, of the applicable Subsidiary if such sale is made in compliance with the covenant described under "— Certain Covenants — Limitation on Sales of Assets and Subsidiary Stock" or (2) upon the designation of the applicable Subsidiary as an Unrestricted Subsidiary in accordance with the indenture.

Change of Control

Upon the occurrence of any of the following events (each a "Change of Control"), each Holder will have the right to require the Issuer to repurchase all or any part of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest thereon to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that notwithstanding the occurrence of a Change of Control, the Issuer shall not be obligated to repurchase the Notes

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pursuant to this section in the event that it has exercised its right to redeem all the Notes under the terms described under "— Optional Redemption":

(1): any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (other than any underwriters or initial purchasers in connection with a bona fide offering of securities of the Issuer) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Issuer;
(2): during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Issuer (together with any new directors whose election by such Board of Directors of the Issuer, as the case may be, or whose nomination for election by the shareholders of the Issuer, as the case may be, was approved by a majority vote of the directors of the Issuer, as the case may be, then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved), cease for any reason to constitute a majority of the Board of Directors of the Issuer, as the case may be, then in office;
(3): the adoption of a plan relating to the liquidation or dissolution of the Issuer; or
(4): the merger or consolidation of the Issuer with or into another Person or the merger of another Person with or into the Issuer, or the sale of all or substantially all the assets of the Issuer to another Person, and, in the case of any such merger or consolidation, the securities of the Issuer that are outstanding immediately prior to such transaction and that represent 100% of the aggregate voting power of the Voting Stock of the Issuer are changed into or exchanged for cash, securities or property, unless pursuant to such transaction such securities are changed into or exchanged for, in addition to any other consideration, securities of the surviving Person or transferee that represent, immediately after such transaction, at least a majority of the aggregate voting power of the Voting Stock of the surviving Person or transferee.

In the event that at the time of such Change of Control the terms of the Bank Indebtedness restrict or prohibit the repurchase of Notes pursuant to this covenant, then prior to the mailing of the notice to Holders provided for in the immediately succeeding paragraph but in any event within 30 days following any Change of Control, the Issuer shall:

(1): repay in full in cash all Bank Indebtedness or, if doing so will allow the repurchase of Notes, offer to repay in full in cash all Bank Indebtedness and repay in full in cash the Bank Indebtedness of each lender who has accepted such offer; or
(2): obtain in writing the requisite consent under the agreements governing the Bank Indebtedness to permit the repurchase of the Notes as provided for in the immediately succeeding paragraph.

Within 30 days following any Change of Control, the Issuer shall mail a notice to each Holder with a copy to the Trustee (the "Change of Control Offer") stating:

(1): that a Change of Control has occurred and that such Holder has the right to require the Issuer to purchase such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest thereon to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date);

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(2): the circumstances and relevant facts and financial information regarding such Change of Control;
(3): the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and
(4): the instructions determined by the Issuer, consistent with this covenant, that a Holder must follow in order to have its Notes purchased.

In the event that Holders of not less than 98% of the principal amount of the outstanding Notes accept a Change of Control Offer and the Issuer purchases all of the Notes held by such Holders, the Issuer will have the right, on not less than 30 nor more than 60 days' prior notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described below, to redeem all of the Notes that remain outstanding following such purchase at the purchase price specified in the Change of Control Offer plus, to the extent not included in the purchase price specified in the Change of Control Offer, accrued and unpaid interest thereon, to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date).

The Issuer will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the purchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof.

To participate in the Change of Control Offer, a holder of IDSs must separate its IDSs into shares of Class A Common Stock and Notes.

The Change of Control purchase feature is a result of negotiations between the Issuer and the initial purchasers. Management has no present intention to engage in a transaction involving a Change of Control, although it is possible that the Issuer would decide to do so in the future. Subject to the limitations discussed below, the Issuer could, in the future, enter into certain transactions, including acquisitions, refinancings or recapitalizations, that would not constitute a Change of Control under the indenture, but that could increase the amount of Indebtedness outstanding at such time or otherwise affect the Issuer's capital structure or credit ratings. Restrictions on the ability of the Issuer to Incur additional Indebtedness and related matters are contained in the covenant described under "— Certain Covenants — Limitation on Indebtedness," "— Certain Covenants — Limitation on Liens" and "— Certain Covenants — Limitation on Sale/Leaseback Transactions." Such restrictions can only be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Except for the limitations contained in such covenants, however, the indenture will not contain any covenants or provisions that may afford Holders protection in the event of a highly leveraged transaction.

The occurrence of certain of the events that would constitute a Change of Control would constitute a default under the Credit Agreement and would constitute a change of control under the ACSH Senior Notes. Future Senior Debt of the Issuer may contain prohibitions of certain events that would constitute a Change of Control or require such Senior Debt to be repurchased or repaid upon a Change of Control. Moreover, the exercise by the Holders of their right to require the Issuer to

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repurchase the Notes could cause a default under such Senior Debt, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Issuer. Finally, the Issuer's ability to pay cash to the Holders upon a repurchase may be limited by the Issuer's then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases. The provisions under the indenture relative to the Issuer's obligation to make an offer to repurchase the Notes as a result of a Change of Control may be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes.

Covenants Relating to IDSs

Recombination of Notes and Common Stock into IDSs. The indenture will provide that as long as any Notes are outstanding, any Holder of Notes and shares of Class A Common Stock may after 90 days from the date hereof, at any time and from time to time, recombine these securities to form IDSs.

Procedures Relating to Subsequent Issuance. The indenture will provide that, in the event there is a subsequent issuance of Additional Notes, each Holder of the Notes or the IDSs (as the case may be) agrees that a portion of such Holder's Notes (whether held directly in book-entry form or held as part of the IDSs) may be exchanged, without any further action of such Holder, for a portion of the Additional Notes purchased by the Holders of such Additional Notes, such that following any such additional issuance and exchange each Holder of the Notes or the IDSs (as the case may be) owns an indivisible unit composed of the Notes and Additional Notes of each issuance in the same proportion as each other Holder, and the records will be revised to reflect each such exchange without any further action of such Holder. The aggregate principal amount of the Notes owned by each Holder will not change as a result of such exchange. Any Additional Notes will be guaranteed by the Guarantors on the same basis as the Notes. Except for the possibility that holders of subsequently issued Notes having any amount of discount may not be able to collect the unamortized portion of the discount in the event of an acceleration of the subordinated notes or a bankruptcy of the Issuer, as described under "Risk Factors—Risks Relating to the IDSs, Including the Class A Common Stock and Notes Represented by the IDSs, and the Separate Notes—Subsequent issuances of notes may cause you to recognize original issue discount and may reduce your recovery in event of bankruptcy," any such automatic exchange should not impair the rights any holder would otherwise have to assert a claim against us, with respect to the full amount of Notes purchased by such holder.

Certain Covenants

The indenture will contain covenants including, among others, the following:

Limitation on Indebtedness. The Issuer will not, and will not permit any Restricted Subsidiary to, Incur any Indebtedness; provided, however, that the Issuer or any Restricted Subsidiary may Incur Indebtedness if on the date of such Incurrence and after giving effect thereto the Debt to EBITDA Ratio would be less than to 1.

Notwithstanding the preceding paragraph, the Issuer and its Restricted Subsidiaries may Incur the following Indebtedness:

(1): Bank Indebtedness in an aggregate principal amount at any one time outstanding pursuant to this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer and the Restricted Subsidiaries thereunder) not to exceed the greater of (A) $325 million or (B) 300% of EBITDA for the period of the most recent four consecutive fiscal quarters ending at the end of the most recent fiscal quarter for which financial statements are publicly available, in each case less the aggregate amount of all prepayments of principal applied to permanently reduce any such Indebtedness; provided,

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however, that Bank Indebtedness in excess of $100 million may only be Incurred if, after giving effect to such Incurrence, the Debt to EBITDA Ratio would be less than to 1;

(2): Indebtedness of the Issuer owed to and held by any Wholly Owned Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Issuer or any Wholly Owned Subsidiary; provided, however, that (a) any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of any such Indebtedness (except to the Issuer or a Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the issuer thereof and (b) if the Issuer is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;
(3): Indebtedness (a) represented by the Notes (not including any Additional Notes) and the Guarantees, including up to $ million aggregate principal amount of Notes and related Guarantees issued in connection with the any exercise of the underwriters' overallotment option granted in connection with the issuance of the IDSs within 12 days after the Closing Date, (b) outstanding on the Closing Date (other than the Indebtedness described in paragraphs (1) and (2) above), or (c) consisting of Refinancing Indebtedness Incurred in respect of any Indebtedness described in this paragraph (3) or paragraph (10) below (including Indebtedness Refinancing Indebtedness) or the first paragraph of this covenant;
(4): Indebtedness consisting of guarantees of any Indebtedness permitted to be Incurred pursuant to the indenture; provided that in the event such Indebtedness that is being guaranteed is (a) senior subordinated Indebtedness, then the related guarantee shall rank equally in right of payment to the applicable Guarantee or (b) a Subordinated Obligation, then the related guarantee shall be subordinated in right of payment to the applicable Guarantee;
(5): (a) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Restricted Subsidiary was acquired by the Issuer (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Subsidiary of, or was otherwise acquired by, the Issuer); provided, however, that on the date that such Restricted Subsidiary is acquired by the Issuer, the Issuer would have been able to Incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to the Incurrence of such Indebtedness pursuant to this paragraph (5) and (b) Refinancing Indebtedness Incurred by the Issuer or a Restricted Subsidiary in respect of Indebtedness incurred pursuant to this paragraph (5);
(6): Indebtedness in respect of performance bonds, bankers' acceptances, letters of credit and surety or appeal bonds provided by the Issuer and the Restricted Subsidiaries in the ordinary course of their business;
(7): Purchase Money Indebtedness and Capitalized Lease Obligations in an aggregate principal amount not in excess of $25 million at any time outstanding;
(8): Hedging Obligations of the Issuer or any Guarantor directly related to Indebtedness permitted to be Incurred by the Issuer or any Guarantor pursuant to the indenture for the purpose of fixing or hedging interest rate risk or currency fluctuations;
(9): (a) Indebtedness of another Person Incurred and outstanding on or prior to the date on which such Person consolidates with or merges with or into the Issuer (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person consolidates with or merges with or into the Issuer); provided, however, that on

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the date that such transaction is consummated, the Issuer would have been able to Incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to the Incurrence of such Indebtedness pursuant to this paragraph (9) and (b) Refinancing Indebtedness Incurred by the Issuer or the Successor Issuer (as defined under "— Merger and Consolidation") in respect of Indebtedness Incurred pursuant to subclause (a) of this paragraph (9); or

(10): Indebtedness represented by up to $ aggregate principal amount of Additional Notes, including the related Guarantees, represented by IDSs to be issued in exchange for Class B Common Stock originally issued in the Reclassification (subject to adjustment for any stock split, reverse stock split or similar event) in accordance with the provisions of the Issuer's amended and restated certificate of incorporation relating to the Class B Common Stock, as described in this prospectus under "Description of Capital Stock—Class B Common Stock—Redemption; Exchange."

Notwithstanding the foregoing, the Issuer may not Incur any Indebtedness pursuant to paragraphs (1) through (10) above if the proceeds thereof are used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any Subordinated Obligations, unless such Indebtedness will be subordinated to the Notes to at least the same extent as such Subordinated Obligations.

Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rates of currencies. For purposes of determining the outstanding principal amount of any particular Indebtedness Incurred pursuant to this covenant:

(a): Indebtedness Incurred pursuant to the Credit Agreement shall be treated as Incurred pursuant to paragraph (1) above;
(b): Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; and
(c): in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in this covenant, the Issuer, in its sole discretion, shall classify such Indebtedness and only be required to include the amount of such Indebtedness in one of such clauses.

Limitation on Senior Subordinated Debt. The Issuer will not incur any Indebtedness that is contractually subordinate or junior in right of payment to any Senior Debt of the Issuer unless it is pari passu or contractually subordinate in right of payment to the Notes to the same extent. No Guarantor will incur any Indebtedness that is contractually subordinate or junior in right of payment to the Senior Debt of such Guarantor unless it is pari passu or contractually subordinate in right of payment to such Guarantor's Guarantee to the same extent.

This covenant would not prohibit the Issuer and the Guarantors from incurring secured and unsecured Senior Debt and does not prohibit the Issuer and the Guarantors from incurring Senior Debt with different priorities with respect to the collateral, including the proceeds therefrom, securing such Senior Debt.

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Limitation on Restricted Payments. The indenture will provide that:

(1)

The Issuer will not, and will not permit any Restricted Subsidiary, directly or indirectly, to:

(a): declare or pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Issuer or any Subsidiary of the Issuer) or similar payment to the direct or indirect holders of its Capital Stock except dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and except dividends or distributions payable to the Issuer or another Restricted Subsidiary (and, if such Restricted Subsidiary has shareholders other than the Issuer or other Restricted Subsidiaries, to its other shareholders on a pro rata basis);
(b): purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Issuer held by Persons other than the Issuer or a Restricted Subsidiary;
(c): purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment any Subordinated Obligations (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case, due within one year of the date of acquisition); or
(d): make any Investment (other than a Permitted Investment) in any Person

(any such dividend, distribution, payment, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Investment being herein referred to as a "Restricted Payment") if at the time the Issuer or such Restricted Subsidiary makes such Restricted Payment:

(i)

a Default will have occurred and be continuing (or would result therefrom);

(ii)

the Issuer could not Incur at least $1.00 of additional Indebtedness under the first paragraph of the covenant described under "— Limitation on Indebtedness"; or

(iii)

the aggregate amount of such Restricted Payment and all other Restricted Payments (the amount so expended, if other than in cash, to be determined in good faith by the Board of Directors, whose determination will be conclusive and evidenced by a resolution of the Board of Directors) declared or made subsequent to the Closing Date would exceed the sum of, without duplication:

(A)

(i) 100% of EBITDA accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter immediately following the fiscal quarter during which the Closing Date occurred to the end of the most recent fiscal quarter for which financial statements are publicly available (or, in case such EBITDA will be a deficit, minus 100% of such deficit), minus

(ii): 140% of Consolidated Interest Expense accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter immediately following the fiscal quarter during which the Closing Date occurred to the end of the most recent fiscal quarter for which financial statements are publicly available, plus
(iii): $ million; plus

(B)

the aggregate Net Cash Proceeds received by the Issuer from the issue or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Closing Date (other than (x) an issuance or sale to a Subsidiary of the Issuer, (y) an issuance

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or sale to an employee stock ownership plan or other trust established by the Issuer or any of its Subsidiaries or (z) to the extent used in accordance with clause (2)(e)(ii)); plus

(C): the aggregate Net Cash Proceeds received by the Issuer from the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) of any Investments previously made by the Issuer or a Restricted Subsidiary and treated as a Restricted Payment; provided that the amount added pursuant to this clause (C) shall not exceed the amount treated as a Restricted Payment and not previously added pursuant to this paragraph (iii); plus
(D): the amount by which Indebtedness of the Issuer or its Restricted Subsidiaries is reduced on the Issuer's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Issuer) subsequent to the Closing Date of any Indebtedness of the Issuer or its Restricted Subsidiaries issued after the Closing Date that is convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Issuer (less the amount of any cash or the fair market value of other property distributed by the Issuer or any Restricted Subsidiary upon such conversion or exchange); plus
(E): the amount equal to the net reduction in Investments in Unrestricted Subsidiaries resulting from (i) payments of dividends, repayments of the principal of loans or advances or other transfers of assets to the Issuer or any Restricted Subsidiary from Unrestricted Subsidiaries or (ii) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued, in each case, as provided in the definition of "Investment") not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Issuer or any Restricted Subsidiary in such Unrestricted Subsidiary, which amount was included in the calculation of the amount of Restricted Payments; plus
(F): $5 million.

(2)

The provisions of the foregoing paragraph (1) will not prohibit:

(a)

any purchase, repurchase, retirement, defeasance or other acquisition or retirement for value of Capital Stock or Subordinated Obligations of the Issuer made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Issuer (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Issuer or an employee stock ownership plan or other trust established by the Issuer or any of its Subsidiaries); provided, however, that:

(i): such Restricted Payment will be excluded in the calculation of the amount of Restricted Payments; and
(ii): the Net Cash Proceeds from such sale applied in the manner set forth in this clause (a) will be excluded from the calculation of amounts under clause (B) of paragraph (iii) above;

(b)

any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Issuer made by exchange for, or out of the proceeds of the substantially concurrent sale of, Indebtedness of the Issuer that is permitted to be Incurred pursuant to paragraphs (1) through (9) of the covenant described under "— Limitation on Indebtedness"; provided, further, that such purchase,

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repurchase, redemption, defeasance or other acquisition or retirement for value will be excluded in the calculation of the amount of Restricted Payments;

(c): any purchase or redemption of Subordinated Obligations from Net Available Cash to the extent permitted by the covenant described under "— Limitation on Sales of Assets and Subsidiary Stock"; provided, further, that such purchase or redemption will be excluded in the calculation of the amount of Restricted Payments;
(d): dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with this covenant; provided, however, that such dividend will be included in the calculation of the amount of Restricted Payments;
(e): the repurchase or other acquisition of shares of, or options to purchase shares of, common stock of the Issuer or any of its Subsidiaries from employees, former employees, consultants, former consultants, directors or former directors of the Issuer or any of its Subsidiaries (or permitted transferees of such employees, former employees, consultants, former consultants, directors or former directors), pursuant to the terms of agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors under which such individuals purchase or sell, or are granted the option to purchase or sell, shares of such common stock; provided, however, that the aggregate amount of such repurchases shall not exceed in any calendar year the sum of (i) $5 million plus (ii) the Net Cash Proceeds (A) received since the Closing Date by the Issuer from the sale of Capital Stock to employees, consultants and directors of the Issuer and (B) not previously credited to any repurchase or other acquisition of such shares or options to purchase shares of common stock pursuant to this clause (2)(e)(ii); provided further, however, that such repurchases and other acquisitions of shares, or options to purchase shares of common stock shall be included in the calculation of the amount of Restricted Payments;
(f): any payments, distributions or other Restricted Payments in connection with the Transactions; provided, further, that such payments, distributions or other Restricted Payments will be excluded in the calculation of the amount of Restricted Payments;
(g): the redemption of shares of Class B Common Stock originally issued in the Reclassification (subject to adjustment for any stock split, reverse stock split or similar event) in accordance with the provisions of the Issuer's certificate of incorporation relating to the Class B Common Stock, solely with the net proceeds received by the Issuer in connection with any exercise of the overallotment option granted in connection with the issuance of the IDSs; provided, further, that such redemption of Class B Common Stock shall not be included in the calculation of the amount of Restricted Payments;
(h): the retirement of shares of Class B Common Stock originally issued in the Reclassification (subject to adjustment for any stock split, reverse stock split or similar event) solely in exchange for IDSs (which IDSs shall be the same series as the IDSs issued on the Closing Date) in accordance with the provisions of the Issuer's certificate of incorporation relating to the Class B Common Stock; provided, further, that such exchange of Class B Common Stock shall not be included in the calculation of the amount of Restricted Payments; and
(i): the declaration and payment of dividends on the Class B Common Stock originally issued in the Reclassification, up to the amount of $ per quarter per share of Class B Common Stock originally issued in the Reclassification and remaining outstanding at the time such dividend is declared (subject to adjustment for any stock split, reverse stock split or similar event); provided, further, that such amounts shall be excluded in the

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calculation of the amount of Restricted Payments; provided, however, that this clause (i) shall not apply at any time when there is a default in any payment of interest on any Note when due and payable, whether or not prohibited by the subordination provisions of the indenture.

Limitation on Restrictions on Distributions from Restricted Subsidiaries. The indenture will provide that the Issuer will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1): pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Issuer or any Guarantor;
(2): make any loans or advances to the Issuer or any Guarantor; or
(3): transfer any of its property or assets to the Issuer or any Guarantor.

The preceding provisions will not prohibit:

(a)

any encumbrance or restriction pursuant to applicable law or an agreement in effect at or entered into on the Closing Date;

(b)

any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary prior to the date on which such Restricted Subsidiary was acquired by the Issuer (other than Indebtedness Incurred as consideration in, in contemplation of, or to provide all or any portion of the funds or credit support utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Issuer) and outstanding on such date;

(c)

any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (a) or (b) above or this clause (c) or contained in any amendment to an agreement referred to in clause (a) or (b) above or this clause (c); provided, however, that the encumbrances and restrictions contained in any such Refinancing agreement or amendment are no less favorable to the Holders than the encumbrances and restrictions contained in such predecessor agreements;

(d)

in the case of clause (3) above, any encumbrance or restriction:

(i): that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract; or
(ii): contained in security agreements securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements;

(e)

with respect to a Restricted Subsidiary, any restriction imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

(f)

any encumbrance or restriction relating to Purchase Money Indebtedness or Capitalized Lease Obligations for property acquired in the ordinary course of business that imposes restrictions on the ability of the Issuer or a Restricted Subsidiary to sell, lease or transfer the acquired property to the Issuer or its Restricted Subsidiaries;

(g)

restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;

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(h): any encumbrance or restriction contained in joint venture agreements and other similar agreements entered into in the ordinary course of business and customary for such types of agreements;
(i): any encumbrance or restriction pursuant to any document or agreement relating to any Bank Indebtedness to the extent customary at the time when agreed to by the Issuer or Restricted Subsidiary, as determined in good faith by the Issuer; and
(j): any encumbrance or restriction pursuant to any document or agreement relating to any Senior Debt of the Issuer or any Guarantor; provided, that such encumbrance or restriction is not more restrictive, taken as a whole, than the restrictions contained in the ACSH Senior Notes Indenture, as in effect on the Closing Date.

Limitation on Sales of Assets and Subsidiary Stock. The indenture will provide that the Issuer will not, and will not permit any Restricted Subsidiary to, make any Asset Disposition unless:

(a)

the Issuer or such Restricted Subsidiary receives consideration (including by way of relief from, or by any other Person assuming sole responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the fair market value, as determined in good faith by the Issuer (or, in the case of an Asset Disposition with a fair market value of $2.5 million or more, the Board of Directors), of the shares and assets subject to such Asset Disposition;

(b)

at least 75% of the consideration thereof received by the Issuer or such Restricted Subsidiary is in the form of cash; provided that the following shall be deemed to be cash for purposes of this clause (b): (i) the amount of any liabilities (as shown on the Issuer's, or such Restricted Subsidiary's, most recent balance sheet or in the notes thereto) of the Issuer or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes or the Guarantees) that are assumed by the transferee of any such assets, (ii) the amount of any securities received by the Issuer or such Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into cash (to the extent of the cash received) within 90 days following the closing of such Asset Disposition, (iii) the fair market value of any Telecommunications Assets received by the Issuer in such Asset Disposition and (iv) the fair market value of any Permitted Joint Venture Interests received by the Issuer or any Restricted Subsidiary in such Asset Disposition; provided that the aggregate fair market value of all Permitted Joint Venture Interests received pursuant to this clause (iv), valued, in each case, at the time of receipt, shall not exceed 10% of Consolidated Net Tangible Assets (for purposes of this paragraph (b), all determinations of fair market value shall be made in good faith by the Board of Directors and evidenced by an Officers' Certificate delivered to the Trustee); and

(c)

an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Issuer (or such Restricted Subsidiary, as the case may be):

(i): first, to the extent the Issuer elects (or is required by the terms of any Indebtedness), to prepay, repay, redeem, purchase or otherwise acquire Senior Debt of the Issuer or of a Wholly Owned Subsidiary within 240 days of the later of the date of such Asset Disposition or the receipt of such Net Available Cash;
(ii): second, to the extent of the balance of Net Available Cash after application in accordance with clause (i) above, to the extent the Issuer or such Restricted Subsidiary elects to, or enters into a binding agreement to, reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with cash in an amount equal to the amount of Net Available Cash received by, or to be received by, the Issuer

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or another Restricted Subsidiary) within 240 days of the later of such Asset Disposition or the receipt of such Net Available Cash; and

(iii): third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (i) and (ii) above, to make an Offer (as defined in clause (2) below) to purchase Notes pursuant to and subject to the conditions set forth in paragraph (2) below; provided, however, that, if the Issuer elects (or is required by the terms of any other Senior Debt), such Offer may be made ratably to purchase the Notes and other Senior Debt of the Issuer;

provided, however that, in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (i) or (iii) above, the Issuer or such Restricted Subsidiary will retire such Indebtedness and will cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.

In the event of an Asset Disposition that requires the purchase of Notes pursuant to clause (c)(iii) above, the Issuer will be required to offer to purchase Notes tendered pursuant to an offer by the Issuer for the Notes (an "Offer") at a purchase price of 100% of their principal amount plus accrued and unpaid interest thereon, to the date of purchase in accordance with the procedures (including prorating in the event of oversubscription) set forth in the indenture and to purchase other pari passu Indebtedness on the terms and to the extent contemplated thereby. The Issuer will not be required to make an Offer for Notes (and other pari passu Indebtedness) pursuant to this covenant if the Net Available Cash available therefor (after application of the proceeds as provided in clauses (c)(i) and (c)(ii) above) is less than $10 million for any particular Asset Disposition (which lesser amount will be carried forward for purposes of determining whether an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition).

Upon completion of any Offer, the amount of Net Available Cash shall be reset at zero and the Issuer shall be entitled to use any remaining proceeds for any corporate purposes to the extent permitted under the indenture. Notwithstanding the foregoing provisions of this covenant, the Issuer and the Restricted Subsidiaries will not be required to apply any Net Available Cash in accordance with this covenant except to the extent that the aggregate Net Available Cash from all Asset Dispositions that is not applied in accordance with this covenant exceeds $10 million.

The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof.

To participate in an Offer, a Holder of IDSs must separate its IDSs into shares of Class A Common Stock and Notes.

Limitation on Transactions with Affiliates. (1) The indenture will provide that the Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into or conduct any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Issuer (an "Affiliate Transaction") unless such Affiliate Transaction is on terms:

(a): that are no less favorable to the Issuer or such Restricted Subsidiary, as the case may be, than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate;

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(b)

that, in the event such Affiliate Transaction involves an aggregate amount in excess of $5 million:

(i): are set forth in writing; and
(ii): have been approved by a majority of the members of the Board of Directors having no personal stake, other than as a holder of Capital Stock of the Issuer or such Restricted Subsidiary, in such Affiliate Transaction; and

(c)

that, in the event such Affiliate Transaction involves an aggregate amount in excess of $15 million, have been determined by a nationally recognized appraisal or investment banking firm to be fair, from a financial standpoint, to the Issuer and its Restricted Subsidiaries.

(2)

The provisions of paragraph (1) above will not prohibit:

(i): any Restricted Payment permitted to be paid pursuant to the covenant described under "— Limitation on Restricted Payments";
(ii): any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors;
(iii): the grant of stock options or similar rights to employees and directors of the Issuer pursuant to plans approved by the Board of Directors;
(iv): loans or advances to employees in the ordinary course of business in accordance with past practices of the Issuer, but in any event not to exceed $10 million in the aggregate outstanding at any one time;
(v): the payment of reasonable fees to directors of the Issuer and its Subsidiaries who are not employees of the Issuer or its Subsidiaries;
(vi): any transaction between the Issuer and a Restricted Subsidiary or between Restricted Subsidiaries;
(vii): customary indemnification and insurance arrangements in favor of officers, directors, employees and consultants of the Issuer or any of the Restricted Subsidiaries;
(viii): any payments, distributions or arrangements described in this prospectus as a part of the Transactions;
(ix): the payment to Fox Paine & Company, LLC, of $ million as a transaction advisory fee in connection with the Transactions and to terminate our management services agreement with Fox Paine & Company, LLC;
(x): any contract or agreement with any Affiliate of the Issuer in effect on the Closing Date, the terms of which are described in this prospectus under "Certain Relationships and Related Party Transactions," and the performance by the Issuer and its Subsidiaries of such contract or agreement and any amendment, renewal or replacement thereof, provided that the terms of such amendment, renewal or replacement, taken as a whole, are not materially less favorable to the Issuer than such contract or agreement in effect on the Closing Date; and
(xi): the redemption or exchange of Class B Common Stock originally issued in the Reclassification (subject to adjustment for any stock split, reverse stock split or similar event) in accordance with the provisions of the Issuer's certificate of incorporation relating to Class B Common Stock, as described under "Description of Capital Stock—

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Class B Common Stock—Redemption; Exchange," provided that the terms of any such redemption or exchange with Affiliates are no less favorable in any material respect to the Issuer than the terms of redemption or exchange made available to other holders of Class B Common Stock that are not Affiliates at such time.

Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries. The Issuer will not sell or otherwise dispose of any shares of Capital Stock of a Restricted Subsidiary, and will not permit any Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any shares of its Capital Stock except:

(1): to the Issuer or a Wholly Owned Subsidiary;
(2): if, immediately after giving effect to such issuance, sale or other disposition, neither the Issuer nor any of its Subsidiaries own any Capital Stock of such Restricted Subsidiary; or
(3): if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect thereto would have been permitted to be made under the covenant described under "— Limitation on Restricted Payments" if made on the date of such issuance, sale or other disposition.

The proceeds of any sale of such Capital Stock permitted hereby will be treated as Net Available Cash from an Asset Disposition and must be applied in accordance with the terms of the covenant described under "— Limitation on Sales of Assets and Subsidiary Stock."

Limitation on Liens. The Issuer and each Guarantor will not, and the Issuer will not permit any Restricted Subsidiary, including any Guarantor, to, directly or indirectly, create, Incur or permit to exist any Lien on any of its, or such Restricted Subsidiary's property or assets (including Capital Stock of a Restricted Subsidiary), whether owned at the Closing Date or thereafter acquired, other than Permitted Liens, without effectively providing that the Notes shall be secured equally and ratably with (or prior to) the obligations so secured for so long as such obligations are so secured.

SEC Reports. Notwithstanding that the Issuer may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Issuer will file with the SEC and provide the Trustee and Holders and prospective Holders (upon request) within 15 days after it files them with the SEC, copies of its annual report and the information, documents and other reports that are specified in Sections 13 and 15(d) of the Exchange Act. In addition, the Issuer shall furnish to the Trustee and Holders, promptly upon their becoming available, without cost, copies of the annual report to shareholders and any other information provided by the Issuer to its public shareholders generally. The Issuer also will comply with the other provisions of Section 314(a) of the TIA.

Future Guarantors. If the Issuer or any of its Restricted Subsidiaries creates or acquires another Domestic Subsidiary on or after the Closing Date the Issuer will cause each such Domestic Subsidiary to become a Guarantor, and execute and deliver to the Trustee a supplemental indenture in the form set forth in the indenture within 20 Business Days of the date on which it was acquired or created, pursuant to which such Domestic Subsidiary will guarantee payment of the Notes. Each Guarantee will be limited to an amount not to exceed the maximum amount that can be guaranteed by that Domestic Subsidiary without rendering the Guarantee, as it relates to such Domestic Subsidiary, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

Limitations on Issuances of Guarantees of Indebtedness. The Issuer will not permit any of its Subsidiaries, directly or indirectly, to guarantee or pledge any assets to secure the payment of any other Indebtedness of the Issuer or any other Subsidiary (other than a guarantee or pledge by a Foreign Subsidiary securing the payment of Indebtedness of another Foreign Subsidiary) unless either (1) such

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Subsidiary is a Guarantor or (2) such Subsidiary simultaneously executes and delivers a supplemental indenture providing for the guarantee of the payment of the Notes by such Subsidiary, which guarantee shall be senior to or pari passu with such Subsidiary's guarantee of or pledge to secure such other Indebtedness, unless such other Indebtedness is Senior Debt, in which case the guarantee of the Notes may be subordinated to the guarantee of such Senior Debt to the same extent as the Notes are subordinated to such Senior Debt.

Notwithstanding the preceding paragraph, each Guarantee will provide by its terms that it will be automatically and unconditionally released and discharged under the circumstances described above under the caption "— Guarantees" or if the applicable Subsidiary's guarantee or pledge of assets to secure the payment of such other Indebtedness referred to in the preceding paragraph is released.

Limitation on Lines of Business. The Issuer will not, and will not permit any Restricted Subsidiary to, engage in any business, other than a Related Business.

Limitation on Sale/Leaseback Transactions. The Issuer will not, and will not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless:

(1)

the Issuer or such Restricted Subsidiary would be entitled to:

(a): Incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to the covenant described under "— Limitation on Indebtedness" and
(b): create a Lien on such property securing such Attributable Debt without equally and ratably securing the Notes pursuant to the covenant described under "— Limitation on Liens";

(2)

the net proceeds received by the Issuer or such Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the fair market value of such property; and

(3)

the transfer of such property is permitted by, and the Issuer applies the proceeds of such transaction in compliance with, the covenant described under "— Limitation on Sales of Assets and Subsidiary Stock."

Merger and Consolidation

The Issuer will not, directly or indirectly, consolidate with or merge with or into another Person (whether or not the Issuer is the surviving corporation), and the Issuer will not sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer in one or more related transactions, to another Person (including by way of consolidation or merger), unless:

(1): the resulting, surviving or transferee Person (the "Successor Issuer") will be a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia, and the Successor Issuer (if not the Issuer) will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Issuer under the Notes and the indenture;
(2): immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Issuer or any Restricted Subsidiary as a result of such transaction as having been incurred by the Successor Issuer or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;

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(3): immediately after giving effect to such transaction, the Successor Issuer would be able to Incur an additional $1.00 of Indebtedness under the first paragraph of the covenant described under "— Certain Covenants — Limitation on Indebtedness";
(4): the Issuer shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the indenture; and
(5): the Issuer shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such transaction and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such transaction had not occurred.

Notwithstanding the foregoing clause (2) or (3), the Issuer may merge with a Wholly Owned Subsidiary incorporated or formed solely for the purpose of reincorporating the Issuer in another jurisdiction satisfying the requirements of clause (1) above.

The Successor Issuer will succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the indenture, but the Issuer, in the case of a conveyance, transfer or lease of all or substantially all its assets, will not be released from the obligation to pay the principal of and interest on the Notes.

In addition, the Issuer will not permit any Guarantor to consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets to any Person unless:

(1): the resulting, surviving or transferee Person will be a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia, and such Person (if not such Guarantor) will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Guarantor under its Guarantee;
(2): immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been Incurred by such Person at the time of such transaction), no Default shall have occurred and be continuing; and
(3): the Issuer will have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the indenture.

Notwithstanding the foregoing clause (2), any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Issuer or another Restricted Subsidiary.

Defaults

Each of the following is an "Event of Default":

(1): a default for 30 days in any payment of interest on any Note when due and payable, whether or not prohibited by the subordination provisions of the indenture;

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(2): a default in the payment of principal of any Note when due and payable at its Stated Maturity, upon redemption or required repurchase, upon declaration or otherwise, whether or not such payment is prohibited by the subordination provisions of the indenture;
(3): the failure by the Issuer to comply with its obligations provisions described under the caption "— Merger and Consolidation";
(4): the failure by the Issuer to comply for 30 days after notice under the provisions described under "— Change of Control" or "— Certain Covenants" (in each case, other than a failure to purchase Notes);
(5): the failure by the Issuer to comply for 60 days after notice with any other provisions contained in the Notes or the indenture, other than as described in (3) and (4) above;
(6): the failure by the Issuer or any Subsidiary of the Issuer to pay any Indebtedness (other than Indebtedness owing to the Issuer or a Subsidiary of the Issuer) within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default if the total amount of such Indebtedness unpaid or accelerated exceeds $5.0 million or its foreign currency equivalent (the "cross acceleration provision") and such failure continues for 10 days after receipt of the notice specified in the indenture;
(7): certain events of bankruptcy, insolvency or reorganization of the Issuer or a Significant Subsidiary (the "bankruptcy provisions");
(8): the rendering of any judgment or decree for the payment of money in excess of $5.0 million or its foreign currency equivalent against the Issuer or a Subsidiary of the Issuer, to the extent such judgment or decree is not covered by insurance or is in excess of insurance coverage, if such judgment or decree remains outstanding for a period of 60 days following such judgment and is not discharged, waived or stayed (the "judgment default provision"); or
(9): any Guarantee ceases to be in full force and effect (except as contemplated by the terms thereof) or any Guarantor or Person acting by or on behalf of such Guarantor denies or disaffirms such Guarantor's obligations under the indenture or any Guarantee and such Default continues for 10 days after receipt of the notice specified in the indenture.

The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

If an Event of Default (other than an Event of Default under the bankruptcy provisions) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes by notice to the Issuer may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable; provided, however, that with respect to an Event of Default under clause (4) above attributable solely to the Issuer's failure to comply with the covenant described under "—Certain Covenants—Limitation on Restricted Payments" due to the making of a Restricted Payment prohibited by clause (1)(a) of such covenant, at a time when the making of such Restricted Payment was not in compliance with clause (iii) of such covenant, the Trustee or Holders of an Excess Dividend Majority (as defined below) may declare the principal of, and accrued but unpaid interest on, all the Notes to be due and payable. Upon such a declaration, such principal and interest will be due and payable immediately. If an Event of Default under the bankruptcy provisions occurs, the principal of and interest on all the Notes will become immediately due and payable without any declaration or

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other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences; provided, however, that with respect to an Event of Default under clause (4) above attributable solely to the Issuer's failure to comply with the covenant described under "—Certain Covenants—Limitation on Restricted Payments" due to the making of a Restricted Payment prohibited by clause (1)(a) of such covenant, at a time when the making of such Restricted Payment was not in compliance with clause (iii) of such covenant, such acceleration with respect to the Notes and its consequences may only be rescinded by the Holders of an Excess Dividend Majority (as defined below) of the Notes. An "Excess Dividend Majority" means an aggregate principal amount of outstanding Notes that exceeds (x) 100% of the aggregate principal amount of the outstanding Notes less (y) the aggregate principal amount of the Notes issued in the initial offering of the separate notes on the Closing Date.

However, a default under clause (4), (5) or (6) above will not constitute an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes notify the Issuer of the default and the Issuer does not cure such default within the time specified in clauses (4), (5) or (6) above after receipt of such notice; provided, however, that with respect to a default under clause (4) above attributable solely to the Issuer's failure to comply with the covenant described under "—Certain Covenants—Limitation on Restricted Payments" due to the making of a Restricted Payment prohibited by clause (1)(a) of such covenant, at a time when the making of such Restricted Payment was not in compliance with clause (iii) of such covenant, the default will to constitute an Event of Default until the Trustee or Holders of an Excess Dividend Majority notify the Issuer of the default and the Issuer does not cure such default within the time period specified in clause (4) above after receipt of such notice.

Subject to the provisions of the indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the indenture or the Notes unless:

(1): such Holder has previously given the Trustee notice that an Event of Default is continuing;
(2): Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee in writing to pursue the remedy;
(3): such Holders have offered the Trustee reasonable security or indemnity satisfactory to it against any loss, liability or expense;
(4): the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and
(5): the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

If payment of the Notes is accelerated because of an Event of Default, the Issuer or the Trustee shall promptly notify the holders of the Designated Senior Debt (or their representative) of the acceleration. If any Designated Senior Debt is outstanding, the Issuer may not pay the amounts due on the Notes until five business days after such holders or the representative of such Designated Senior Debt receive notice of such acceleration and, thereafter, may pay the amounts due on the Notes only if otherwise permitted by the provisions disclosed under "— Subordination" above.

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Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes will be given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the indenture, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the Default within 30 days after it is known to a Responsible Officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note (including payments pursuant to the redemption provisions of such Note), the Trustee may withhold notice if and so long as a committee of its Responsible Officers in good faith determines that withholding notice is in the interests of the Holders. In addition, the Issuer will be required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Issuer will also be required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any event that would constitute certain Events of Default, its status and what action the Issuer is taking or proposes to take in respect thereof.

Amendments and Waivers

Subject to certain exceptions, the indenture or the Notes may be amended with the written consent of the Holders of a majority in principal amount of the Notes then outstanding and any past default or compliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. However, without the consent of each Holder of an outstanding Note affected, no amendment may, among other things:

(1): reduce the amount of Notes whose Holders must consent to an amendment;
(2): reduce the rate of or extend the time for payment of interest on any Note;
(3): reduce the principal of or extend the Stated Maturity of any Note;
(4): reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under "— Optional Redemption";
(5): make any Note payable in money other than that stated in the Note;
(6): impair the right of any Holder to receive payment of principal of, and interest on, such Holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes;
(7): make any change in the amendment provisions which require each Holder's consent or in the waiver provisions; or
(8): modify the Guarantees in any manner adverse to the Holders.

Without the consent of any Holder, the Issuer and the Trustee may amend the indenture to:

(1): cure any ambiguity, omission, defect or inconsistency;

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(2): provide for the assumption by a successor corporation of the obligations of the Issuer under the indenture;
(3): provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);
(4): add additional Guarantees with respect to the Notes;
(5): secure the Notes;
(6): add to the covenants of the Issuer for the benefit of the Holders or to surrender any right or power conferred upon the Issuer;
(7): make any change that does not adversely affect the rights of any Holder, subject to the provisions of the indenture;
(8): provide for the issuance of Additional Notes; or
(9): comply with any requirement of the SEC in connection with the qualification of the indenture under the TIA.

No amendment may be made to the subordination provisions of the indenture that adversely affects the rights of any holder of Designated Senior Debt then outstanding unless the holders of such Designated Senior Debt (or any group or representative thereof authorized to give a consent) consent to such change.

The consent of the Holders will not be necessary to approve the particular form of any proposed amendment. It will be sufficient if such consent approves the substance of the proposed amendment.

After an amendment becomes effective, the Issuer will be required to mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment.

Transfer and Exchange

A Holder will be able to transfer or exchange Notes. Upon any transfer or exchange, the registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes required by law or permitted by the indenture. The Issuer will not be required to transfer or exchange any Note selected for redemption or to transfer or exchange any Note for a period of 15 days prior to a selection of Notes to be redeemed. The Notes will be issued in registered form and the Holder will be treated as the owner of such Note for all purposes.

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Satisfaction and Discharge

The indenture will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of notes) as to all outstanding Notes when either:

(a)	All outstanding Notes, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Issuer, have been delivered to the Trustee for cancellation; or
(b)	(1)	all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination of cash in U.S. dollars and non-callable U.S. Government Obligations, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;
	(2)	the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be;
	(3)	the deposit does and will not result in a breach or violation of, or constitute a default under the indenture or any other material agreement or instrument to which the Issuer or any of its Significant Subsidiaries are a party or are otherwise bound;
	(4)	the Issuer has paid all other amounts payable by the Issuer under the indenture; and
	(5)	the Issuer has delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Issuer with intent to hinder, delay, or defraud any other of the Issuer's creditors.

The Issuer must also deliver to the Trustee an Officers' Certificate and an opinion of counsel, which opinion can be subject to customary qualifications, confirming the satisfaction of the conditions in clause (3) above.

Defeasance

The Issuer may at any time terminate all its obligations under the Notes and the indenture ("legal defeasance"), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. In addition, the Issuer may at any time terminate:

(1): its obligations under the covenants described under "— Certain Covenants" or
(2): the operation of the cross acceleration provision, the bankruptcy provisions with respect to Significant Subsidiaries and the judgment default provision described under "— Defaults" and the limitations contained in clauses (3) and (4) under the first paragraph under "— Merger and Consolidation" ("covenant defeasance").

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In the event that the Issuer exercises its legal defeasance option or its covenant defeasance option, each Guarantor will be released from all of its obligations with respect to its Guarantee.

The Issuer may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Issuer exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Issuer exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (4), (6), (7) (with respect only to Significant Subsidiaries), (8) or (9) under "— Defaults" or because of the failure of the Issuer to comply with clause (3) or (4) under the first paragraph under "— Merger and Consolidation."

In order to exercise either defeasance option, the Issuer must irrevocably deposit in trust (the "defeasance trust") with the Trustee money or U.S. Government Obligations for the payment of principal, premium (if any) and interest on, the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and will be subject to federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable federal income tax law).

Concerning the Trustee

is to be the Trustee under the indenture and has been appointed by the Issuer as Registrar and Paying Agent with regard to the Notes.

Governing Law

The indenture and the Notes will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby.

Certain Definitions

"ACSH Notes" means the ACSH Senior Notes and the ACSH Senior Subordinated Notes.

"ACSH Senior Notes" means the 9⁷/8% Senior Notes due 2011 issued by ACSH and outstanding on the Closing Date.

"ACSH Senior Notes Indenture" means the indenture, dated as of August 26, 2003, between ACSH, as issuer, The Bank of New York, as trustee, and the guarantors party thereto relating to the ACSH Senior Notes.

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"ACSH Senior Subordinated Notes" means the 9³/8% Senior Subordinated Notes due 2009 issued by ACSH and outstanding on the Closing Date.

"ACSH Swaps" means (1) the interest rate swap arrangements entered into between ACSH and/or the Issuer and as of the Closing Date and providing for net periodic payments to ACSH as disclosed in this prospectus under "Description of Other Indebtedness — Interest Rate Swap Arrangements" and (2) any similar interest rate swap arrangements entered into with respect to the ACSH Senior Notes and/or the ACSH Senior Subordinated Notes and replacing the interest rate swaps referred to in (1) above.

"Additional Assets" means:

(1): any property or assets (other than Indebtedness and Capital Stock) to be used by the Issuer or a Restricted Subsidiary in a Related Business;
(2): the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Issuer or another Restricted Subsidiary; or
(3): Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;

provided, however, that any such Restricted Subsidiary described in clause (2) or (3) above is primarily engaged in a Related Business.

"Adjusted EBITDA" for any period means the EBITDA for such period, plus the following to the extent deducted in calculating such EBITDA or the Consolidated Net Income for such period:

(1): all other non-cash charges of the Issuer and its Restricted Subsidiaries, whether or not any such non-cash charge represents an accrual of or reserve for cash expenditures in any future period;
(2): if since the beginning of such period the Issuer or any Restricted Subsidiary shall have made any Asset Disposition, an amount equal to the EBITDA (if negative) directly attributable to the assets that are the subject of such Asset Disposition;
(3): all management, advisory or investment banking or similar fees paid or payable to Fox Paine & Company, LLC (or entities controlled by it) during such period;
(4): nonrecurring or unusual recruiting, severance and restructuring costs during such period, as determined in good faith by the Issuer; provided that the total of such costs shall not exceed $5 million per twelve-month period;
(5): costs, fees and expenses associated with proposed acquisitions (including the financing thereof) not completed; provided that the total of such costs shall not exceed $ per twelve-month period; and
(6): an amount equal to the revenues and expenses attributable to material business operations discontinued or terminated during such period

and minus the following to the extent included in calculating such EBITDA or the Consolidated Net Income for such period:

(1): any nonrecurring revenue (net of associated expenses) relating to a prior year and previously deferred as a result of regulatory proceedings; and
(2): if since the beginning of such period the Issuer or any Restricted Subsidiary shall have made any Asset Disposition, an amount equal to the EBITDA (if positive) directly attributable to the assets that are the subject of such Asset Disposition;

in each case for such period.

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"Adjusted EBITDA Coverage Ratio" as of any date of determination means the ratio of:

(1): Adjusted EBITDA for the period of the most recent four consecutive fiscal quarters ending at the end of the most recent fiscal quarter for which financial statements are publicly available to
(2): Consolidated Interest Expense for the period of the most recent four consecutive fiscal quarters ending at the end of the most recent fiscal quarter for which financial statements are publicly available;

provided, however, that:

(a): if the Issuer or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period or if any Indebtedness is to be Incurred on the Extension Date, Adjusted EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such incurrence had occurred on the first day of such period;
(b): if the Issuer or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case, other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the Extension Date, Adjusted EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such repayment, repurchase, defeasance or discharge had occurred on the first day of such period and as if the Issuer or such Restricted Subsidiary has not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness;
(c): if since the beginning of such period, the Issuer or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Person that is merged with or into the Issuer or any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of assets, which constitutes all or substantially all of an operating unit of a business, Adjusted EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and
(d): if since the beginning of such period, any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to the definition of "Adjusted EBITDA" or clause (c) above if made by the Issuer or a Restricted Subsidiary during such period, Adjusted EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Asset Disposition, Investment or acquisition of assets occurred on the first day of such period.

For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets and the amount of income or earnings relating thereto, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Issuer. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term as at the date of determination in excess of twelve

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months). For the avoidance of doubt, in determining whether any gain or loss is "nonrecurring," (A) Item 10(e) of Regulation S-K under the Securities Act (or any successor provision) shall not constitute a limitation on any such determination and (B) any gain or loss reasonably deemed "nonrecurring" in a particular year shall not thereafter be retroactively reclassified as "recurring" with respect to that same year regardless of whether it actually recurs in a subsequent year.

"Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control," when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the provisions described under "— Certain Covenants — Limitation on Transactions with Affiliates" and "— Certain Covenants—Limitation on Sales of Assets and Subsidiary Stock" only, "Affiliate" shall also mean any beneficial owner of shares representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Issuer or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof.

"Asset Disposition" means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Issuer or any Restricted Subsidiary, including any disposition by means of a merger, consolidation, or similar transaction (each referred to for the purposes of this definition as a "disposition"), of:

(1): any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares or shares required by applicable law to be held by a Person other than the Issuer or a Restricted Subsidiary);
(2): all or substantially all the assets of any division or line of business of the Issuer or any Restricted Subsidiary; or
(3): any other assets of the Issuer or any Restricted Subsidiary outside of the ordinary course of business of the Issuer or such Restricted Subsidiary

other than, in the case of clauses (1), (2) and (3) above:

(a): a disposition by a Restricted Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to a Wholly Owned Subsidiary;
(b): for purposes of the provisions described under "— Certain Covenants — Limitation on Sales of Assets and Subsidiary Stock" only, a disposition subject to the covenant described under "— Certain Covenants — Limitation on Restricted Payments";
(c): a disposition of assets with a fair market value of less than $1,000,000;
(d): a disposition of Temporary Cash Investments or goods held for sale in the ordinary course of business or obsolete equipment or other obsolete assets in the course of business consistent with past practices of the Issuer;
(e): the disposition of all or substantially all of the assets of the Issuer in a manner permitted under the covenant described under "— Merger and Consolidation" or any disposition that constitutes a Change of Control under the indenture; and
(f): the lease, assignment or sublease of any real or personal property in the ordinary course of business.

"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the

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lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended).

"Average Life" means, as of the date of determination, with respect to any indebtedness or Preferred Stock, the quotient obtained by dividing:

(1): the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by
(2): the sum of all such payments.

"Bank Indebtedness" means any and all amounts payable from time to time under or in respect of the Credit Agreement, including the documents referred to as exhibits and attached to any of the foregoing, the notes issued pursuant thereto, the guarantees thereof, the collateral documents relating thereto, any Hedging Obligations incurred in connection with any Indebtedness outstanding thereunder and any Refinancing Indebtedness with respect thereto, as amended, amended and restated or otherwise modified from time to time, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the issuer whether or not a claim for post-filing interest is allowed in such proceedings), fees, indemnities, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof.

"Board of Directors" means the Board of Directors of the Issuer or any committee thereof duly authorized to act on behalf of the Board of Directors of the Issuer.

"Business Day" means each day that is not a Legal Holiday.

"Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

"Capitalized Lease Obligations" means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

"Class B Common Stock" means the Class B common stock of the Issuer, $0.01 par value, as the terms thereof exist on the Closing Date.

"Closing Date" means the date of the indenture.

"Code" means the Internal Revenue Code of 1986, as amended.

"Consolidated Current Liabilities" as of the date of determination means the aggregate amount of liabilities of the issuer and its Consolidated Restricted Subsidiaries which may properly be classified as current liabilities (including taxes accrued as estimated), on a Consolidated basis, after eliminating:

(1): all intercompany items between the Issuer and any Restricted Subsidiary; and
(2): all current maturities of long-term indebtedness, all as determined in accordance with GAAP consistently applied.

"Consolidated Interest Expense" means, for any period, the total interest expense of the Issuer and its Consolidated Restricted Subsidiaries, plus, to the extent Incurred by the Issuer and its Consolidated Restricted Subsidiaries in such period but not included in such interest expense:

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(1): interest expense attributable to Capitalized Lease Obligations and the interest expense attributable to leases constituting part of a Sale/Leaseback Transaction;
(2): amortization of debt discount and debt issuance costs;
(3): capitalized interest;
(4): non-cash interest expense;
(5): commissions, discounts and other fees and charges attributable to letters of credit and bankers' acceptance financing;
(6): interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is guaranteed by the Issuer or any Restricted Subsidiary;
(7): amortization of net costs associated with Hedging Obligations (including amortization of fees);
(8): dividends in respect of all Disqualified Stock of the Issuer and all Preferred Stock of any of the Subsidiaries of the Issuer, to the extent held by Persons other than the Issuer or a Wholly Owned Subsidiary;
(9): interest Incurred in connection with investments in discontinued operations; and
(10): the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Issuer) in connection with Indebtedness Incurred by such plan or trust.

and minus, to the extent received in cash by the Issuer and its Consolidated Restricted Subsidiaries in such period but not otherwise taken into account in calculating such interest expense, periodic payments pursuant to the ACSH Swaps, provided that in no event shall Consolidated Interest Expense for any period be so reduced by more than the product of (x) the weighted average aggregate principal amount of the ACSH notes outstanding during the period and (y) %.

"Consolidated Net Income" means, for any period, the net income of the Issuer and its Consolidated Subsidiaries for such period; provided, however, that there shall not be included in such Consolidated Net Income:

(1)

any net income of any Person (other than the Issuer) if such Person is not a Restricted Subsidiary, except that:

(a): subject to the limitations contained in clause (4) below, the Issuer's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash or other assets actually distributed by such Person during such period to the Issuer or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution made to a Restricted Subsidiary, to the limitations contained in clause (3) below); and
(b): the Issuer's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income;

(2)

any net income of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of its net income is not, at the date of determination, permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter, or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived, except that the net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income;

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(3): any gain (but not loss) realized upon the sale or other disposition of any asset of the Issuer or its Consolidated Subsidiaries (including pursuant to any Sale/Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business and any gain (but not loss) realized upon the sale or other disposition of any Capital Stock of any Person;
(4): any extraordinary or otherwise nonrecurring gain or loss; and
(5): the cumulative effect of a change in accounting principles.

Notwithstanding the foregoing, for the purposes of the covenant described under "— Certain Covenants — Limitation on Restricted Payments" only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries to the Issuer or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such covenant pursuant to clause (1)(d)(iii)(E) thereof. For the avoidance of doubt, in determining whether any gain or loss is "nonrecurring," (A) Item 10(e) of Regulation S-K under the Securities Act (or any successor provision) shall not constitute a limitation on any such determination and (B) any gain or loss reasonably deemed "nonrecurring" in a particular year shall not thereafter be retroactively reclassified as "recurring" with respect to that same year regardless of whether it actually recurs in a subsequent year.

"Consolidated Net Tangible Assets" as of any date of determination, means the total amount of assets (less accumulated depreciation and amortization, allowances for doubtful receivables, other applicable reserves and other properly deductible items) which would appear on a consolidated balance sheet of the Issuer and its Consolidated Restricted Subsidiaries, determined on a Consolidated basis in accordance with GAAP, and after giving effect to purchase accounting and after deducting therefrom Consolidated Current Liabilities and, to the extent otherwise included, the amounts of:

(1): minority interests in Consolidated Subsidiaries held by Persons other than the Issuer or a Restricted Subsidiary;
(2): excess of cost over fair value of assets of businesses acquired, as determined in good faith by the Board of Directors;
(3): any revaluation or other write-up in book value of assets subsequent to the Closing Date as a result of a change in the method of valuation in accordance with GAAP consistently applied;
(4): unamortized debt discount and expenses and other unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses, organization or developmental expenses and other intangible items;
(5): treasury stock;
(6): cash set apart and held in a sinking or other analogous fund established for the purpose of redemption or other retirement of Capital Stock to the extent such obligation is not reflected in Consolidated Current Liabilities; and
(7): Investments in and assets of Unrestricted Subsidiaries.

"Consolidation" means the consolidation of the accounts of each of the Restricted Subsidiaries with those of the Issuer in accordance with GAAP consistently applied; provided, however, that "Consolidation" will not include consolidation of the accounts of any Unrestricted Subsidiary, but the interest of the Issuer or any Restricted Subsidiary in an Unrestricted Subsidiary will be accounted for as an investment. The term "Consolidated" has a correlative meaning.

"Credit Agreement" means the credit agreement dated as of the Closing Date among ACSH, the Issuer, the lenders party thereto and JPMorgan Chase Bank, as administrative agent, together with the related documents, instruments and agreements executed in connection therewith (including, without limitation, any guarantees, notes, security documents and any documents or arrangements relating to

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any Hedging Obligations incurred in connection with any Indebtedness outstanding thereunder), in each case as such agreements may be amended, amended and restated, renewed, extended, substituted, refinanced (including increasing the amount available for borrowing thereunder and including refinancings with the same or different lenders or agents), restructured, replaced, supplemented, waived, deferred or otherwise modified in whole or in part from time to time, including, without limitation, any agreement extending the maturity of, or increasing the commitments to extend, Indebtedness or any commitment to extend such Indebtedness, and any successor or replacement agreements and whether by the same or any other agent, lender or group of lenders.

"Currency Agreement" means, with respect to any Person, any foreign exchange contract, currency swap agreements or other similar agreement or arrangement to which such Person is a party or of which it is a beneficiary.

"Debt to EBITDA Ratio" as of any date of determination means the ratio of:

(1)

Total Consolidated Indebtedness as of the date of determination to

(2)

EBITDA for the period of the most recent four consecutive fiscal quarters ending at the end of the most recent fiscal quarter for which financial statements are publicly available; provided, however, that:

(a): if the Issuer or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case, other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Debt to EBITDA Ratio, EBITDA for such period shall be calculated on a pro forma basis as if such repayment, repurchase, defeasance or other discharge had occurred on the first day of such period and as if the Issuer or such Restricted Subsidiary has not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness;
(b): if since the beginning of such period the Issuer or any Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets that are the subject of such Asset Disposition for such period or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period;
(c): if since the beginning of such period, the Issuer or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Person that is merged with or into the Issuer or any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; any such pro forma calculation may include adjustments appropriate to reflect, without duplication, (x) any such acquisition to the extent such adjustments may be reflected in the preparation of pro forma financial information in accordance with the requirements of GAAP and Article XI of Regulation S-X under the Exchange Act (or any successor provision), (y) the annualized amount of operating expense reductions reasonably expected to be realized in the six months following any such acquisition made during any of the four fiscal quarters constituting the four-quarter reference period prior to the date of determination and (z) the annualized amount of operating expense

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reductions reasonably expected to be realized in the six months following any such acquisition made by the Issuer during either of the two fiscal quarters immediately preceding the four-quarter reference period prior to the date of determination; provided that in either case such adjustments are set forth in an Officers' Certificate that has been signed by the Issuer's chief executive officer and chief financial officer and that states (i) the amount of such adjustment or adjustments, (ii) that such adjustment or adjustments are based on the reasonable good faith beliefs of the officers executing such Officers' Certificate at the time of such execution and (iii) that any related Incurrence of Indebtedness is permitted pursuant to the indenture; and

(d): if since the beginning of such period, any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition or any Investment or a

ACS OF THE NORTHLAND LICENSE SUB INC S-1